Released June 30, 2025 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--In late May, the U.S. began restricting ethane exports to China, requiring an export license to do so. Primarily affecting the two largest U.S. ethane exporters, Energy Transfer LP (Dallas, Texas) and Enterprise Products Partners LP (Houston, Texas), those companies have now been allowed to load and export ethane to China or a "Chinese 'military end user,' wherever located," but there's a catch--they can't unload the ethane cargoes without further permission from the U.S. federal government.
The notice to halt ethane exports came quickly for the two companies, leaving more than half a dozen loaded vessels stalled around the U.S. Gulf Coast, and when Enterprise shortly thereafter applied to the government for an emergency license to export three ethane cargoes to China totaling approximately 2.2 million barrels, its request was denied.
The U.S. exported 492,000 barrels per day (BBL/d) of ethane last year, with China, the largest purchaser, taking 227,000 BBL/d, or about 46% of total exports. For more on the early days of the licensing requirement and emergency license denial, see June 4, 2025, article - U.S. Restrictions on Ethane, Butane Exports Could Disrupt Oil Markets and June 6, 2025, article - Enterprise Products: U.S. Plans to Deny Request to Ship Ethane to China.
Last week, the department in charge of the licensing requirements, the Department of Commerce's Bureau of Industry and Security (BIS), issued letters to both Enterprise and Energy Transfer, saying that the companies could load and transport ethane to China, but that they, "may not complete such export, reexport, or transfer (in-country) to a party that is located in China ... without further BIS authorization." (Emphasis in the original.)
This very conditional export permission seems to represent somewhat of a thawing in U.S.-China trade relations, with China granting temporary export licenses to rare earth suppliers of the top three U.S. automakers earlier this month. China began restricting rare earth shipments and requiring export licenses in a process full of red tape, using the move as a key leverage point in its bargaining with the Trump administration, as the country contains about 90% of the world's rare earths processing and refining capacity. Rare earths are used in everything from automobiles, computers and mobile phones to wind turbines. Last week, a trade agreement between the two countries was apparently made, although details remain sketchy, but China's delivery of rare earths was part of the package, according to Commerce Secretary Howard Lutnick in an interview with Bloomberg.
The person who originally broke the story to Reuters of lifting the ethane transit ban told the news agency that the inability to unload cargoes most likely would result in neither Enterprise nor Energy Transfer shipping ethane because if the vessels made their way to China, it could be difficult to stop them from offloading, resulting in penalties of up to twice the value of the shipment.
Perhaps as trade relations become less divisive between the two countries, this final hurdle to ethane exports will be lifted.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
The notice to halt ethane exports came quickly for the two companies, leaving more than half a dozen loaded vessels stalled around the U.S. Gulf Coast, and when Enterprise shortly thereafter applied to the government for an emergency license to export three ethane cargoes to China totaling approximately 2.2 million barrels, its request was denied.
The U.S. exported 492,000 barrels per day (BBL/d) of ethane last year, with China, the largest purchaser, taking 227,000 BBL/d, or about 46% of total exports. For more on the early days of the licensing requirement and emergency license denial, see June 4, 2025, article - U.S. Restrictions on Ethane, Butane Exports Could Disrupt Oil Markets and June 6, 2025, article - Enterprise Products: U.S. Plans to Deny Request to Ship Ethane to China.
Last week, the department in charge of the licensing requirements, the Department of Commerce's Bureau of Industry and Security (BIS), issued letters to both Enterprise and Energy Transfer, saying that the companies could load and transport ethane to China, but that they, "may not complete such export, reexport, or transfer (in-country) to a party that is located in China ... without further BIS authorization." (Emphasis in the original.)
This very conditional export permission seems to represent somewhat of a thawing in U.S.-China trade relations, with China granting temporary export licenses to rare earth suppliers of the top three U.S. automakers earlier this month. China began restricting rare earth shipments and requiring export licenses in a process full of red tape, using the move as a key leverage point in its bargaining with the Trump administration, as the country contains about 90% of the world's rare earths processing and refining capacity. Rare earths are used in everything from automobiles, computers and mobile phones to wind turbines. Last week, a trade agreement between the two countries was apparently made, although details remain sketchy, but China's delivery of rare earths was part of the package, according to Commerce Secretary Howard Lutnick in an interview with Bloomberg.
The person who originally broke the story to Reuters of lifting the ethane transit ban told the news agency that the inability to unload cargoes most likely would result in neither Enterprise nor Energy Transfer shipping ethane because if the vessels made their way to China, it could be difficult to stop them from offloading, resulting in penalties of up to twice the value of the shipment.
Perhaps as trade relations become less divisive between the two countries, this final hurdle to ethane exports will be lifted.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
