News
17/06/25
US ethane exports slump as China flows blocked
The EIA has revised down its forecast for US ethane exports following the
introduction of licensing requirements, writes Amy Strahan Houston, 17 June
(Argus) — US exports of ethane fell to a nearly five-year low in early June
following the US Department of Commerce's restrictions on shipments to China ,
but market participants expect the trade dispute to be short-lived. The
department's Bureau of Industry and Security (BIS) sent a letter to midstream
firm Enterprise Products in late May requiring it as the operator of the 240,000
b/d (5mn t/yr) Morgan's Point ethane terminal in Texas to obtain a licence for
future shipments to China citing possible military uses for ethane and butane.
The US' largest ethane exporter, Energy Transfer, which operates the 180,000 b/d
Nederland ethane terminal, then received a similar notice on 3 June.
Enterprise's request for emergency authorisation to ship three ethane cargoes
totalling 2.2mn bl (177,000t) was subsequently denied, sending ethane prices at
the Mont Belvieu hub in Texas to a six-month low of 19.25¢/USG ($142/t) on 5
June. Around 198,000 b/d of US ethane loaded during the week to 26 May, after
Enterprise received its letter, down from 410,000 b/d a week earlier and 547,000
b/d in the same week of 2024, Kpler data show. They are forecast to stand at
218,000 b/d over the week to 9 June. Ethane prices at Mont Belvieu had recovered
to levels seen before the trade restriction by 10 June, owing in part to
seasonal gains in Gulf coast natural gas prices but also because market
participants expect disruptions to cargo loadings to be temporary, with the US
and China holding trade talks in London this month. Very large ethane carriers
(VLEC) that deliver ethane to China were on standby by mid-June. The Pacific
Ineos Grenadier , which loaded ethane from Morgan's Point while Enterprise
appealed against the BIS measure, has been moored at the company's nearby
Houston terminal since 9 June. Satellite's Seri Erlang remains offshore Energy
Transfer's Nederland facility, while its STL Qianji ang , which loaded at
Nederland in the first week of June, is now heading to India. Another Satellite
vessel, STL Yangtze , discharged in India in early June, possibly owing to
maintenance at Satellite's cracker in Lianyungang , China, and is now returning
to Nederland, according to Kpler. "We are all hoping the policy will be reversed
soon," one market participant says, while another adds that it is likely to be
resolved in days and not weeks. Restricted view US government agency the EIA has
nevertheless attempted to forecast the impact the restriction would have on US
ethane exports, revising down its forecast by 51pc to 310,000 b/d (6.4mn t/yr)
for 2026. US ethane export capacity is on track to grow to as much as 900,000
b/d by the end of next year following the opening of new projects, including
Enterprise's new 360,000 b/d Neches River ethane and propane terminal near
Beaumont, Texas, and expansions at Morgan's Point and Energy Transfer's Marcus
Hook terminals. Chinese buyers of US ethane are also hopeful of a relatively
swift resolution owing to the mercurial trade policy of the Donald Trump
administration. If it is not forthcoming, they may look to switch feedslates to
LPG and naphtha when possible in the shorter term, and those that have invested
in new VLEC fleets could repurpose them to LPG or ethylene in the longer term.
Neither would be an attractive proposition given the substantial levels of
investment in new ethane-fed cracking and VLEC capacity, but would ensure that
domestic downstream derivative plants are kept running. Chinese companies are
unlikely to begin importing ethylene instead given the margins would still be
uncompetitive compared with cracking alternative feedstocks. In any event,
buyers "do not want to make a big decision they will regret", one market
participant says. Mont Belvieu ethane price Send comments and request more
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