The United States has lifted restrictions on ethane exports to China, marking a significant step in easing trade tensions between the two nations and reinstating a crucial energy trade flow.
The U.S. Department of Commerce issued letters to major ethane exporters, including Enterprise Products Partners and Energy Transfer, rescinding a license requirement that had been imposed in late May and June. These restrictions were originally introduced in response to China’s slowdown in rare earth mineral shipments, which are vital to various U.S. industries.
Ethane, a byproduct of U.S. shale gas, is primarily used as a petrochemical feedstock. Exports to China had dropped to zero in June from 257,000 barrels per day in May due to the licensing requirements. With the removal of export barriers, analysts expect July exports to rebound to approximately 240,000 barrels per day.
The resumption of ethane exports is expected to benefit both U.S. shale gas producers, who have faced a domestic surplus, and Chinese manufacturers that rely on this cost-effective feedstock. Chinese petrochemical firms prefer ethane over alternatives like naphtha due to its lower cost.
The lifting of restrictions follows a broader resolution of trade issues related to rare earth elements. China had previously suspended exports of rare earths, disrupting global supply chains for industries including automotive, aerospace, semiconductors, and defense. The U.S. and China have now confirmed a framework under which China will review export applications for controlled items while the U.S. cancels corresponding restrictive measures.
The move to resume ethane exports is seen as a return to “business as usual,” according to Vortexa analyst Samantha Hartke, who expects July exports to climb back to the seasonal normal of about 240,000 barrels per day.
This development strengthens energy trade ties and helps rebalance U.S. ethane supply with global demand. It also provides relief to U.S. ethane producers and exporters who had faced potential profit losses due to the export restrictions.
The resumption of ethane exports to China underscores the interconnectedness of global energy markets and the impact of trade policies on supply chains. As both nations continue to navigate complex trade relations, the lifting of these restrictions may serve as a positive indicator for future negotiations and economic cooperation.
