On July 2, the U.S. Commerce Department sent letters to major ethane producers—Enterprise Products Partners, Energy Transfer, Satellite Chemical USA, and Vinmar International—announcing the rescindment of a restrictive licensing requirement that had previously halted ethane exports to China.
What Happened?
- In late May and early June, the U.S. imposed new export license rules on ethane destined for China, citing concerns over national security and Beijing’s earlier slowdown in rare-earth shipments.
- This led to a dramatic drop in May-June shipments—from approximately 257,000 barrels/day in May to virtually zero in June.
- Exporters had ships idling off the Gulf Coast, and U.S. ethane prices plunged due to oversupply worries.
What Changed?
- With recent diplomatic progress—such as China resuming rare-earth exports—the U.S. lifted the licensing requirement.
- As many as eight vessels have resumed sailing toward China, and July exports are expected to rebound to the seasonal level of around 240,000 barrels/day.
Why This Matters
- It confirms the ongoing trade truce between Washington and Beijing, showing tangible rollback on recent economic countermeasures.
- Restoring ethane flows helps both sides:
- U.S. producers regain a critical outlet amid oversupply.
- Chinese petrochemical companies resume access to cheaper feedstock.
Remaining Caution
- Though loading has resumed, export regulations still require some in-country authorization before unloading.
- Entities are cautious: full recovery will hinge on consistent compliance and further diplomatic stability.
Bottom Line
The U.S. letter to ethane exporters marks a meaningful shift: from restriction back to trade normalization. As diplomatic and technical fronts advance hand-in-hand, ethane—a key petrochemical input—is now flowing again, signaling renewed momentum in the broader U.S.–China trade reconciliation.