US ethane exports to China: Trade war heats up: As China clamps down on rare earths, Trump hits back by blocking ethane exports

The Trump administration is moving to block millions of barrels of US ethane exports to China, a critical blow to the global petrochemical supply chain and a direct response to Beijing’s tightening grip on rare earth metals, as per a report.

US Ethane Exporters To Face Major Setback

The largest exporter of ethane in the nation, Enterprise Products Partners, said on June 4 that the US Commerce Department intends to reject the approval to export 2.2 million barrels of ethane from Texas to China, according to Fortune. The Trump administration’s plan came after China limited exports of some rare earth elements—materials critical to American tech and automotive production, as per the report.

For Enterprise and other shippers such as Energy Transfer and Phillips 66, the ruling is poised to disrupt a key part of their business, according to the report. The managing director of analytics at RBN Energy, Kristen Holmquist said, “The [Commerce] decision has the potential to ruin the U.S. ethane market and disrupt global flows,” quoted Fortune.

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China’s Petrochemical Plans in Jeopardy

But the ripple impact is set to hit harder in China. With its fast-paced petrochemical growth highly dependent on US ethane, the sole major world exporter of ethane, as per the report. Almost half of all US ethane exports are sent to China, and the cargoes are not easily redirected to other nations, reported Fortune.

According to the report, ethane is the most common building block for petrochemicals and plastics. East Daley Analytics’ Julian Renton pointed out that “If the restriction holds, China’s planned petrochemical expansions could become obsolete on arrival,” as quoted in the report. Renton also mentioned that, “Projects under construction may stall. Existing plants could face critical feedstock shortfalls. China bet billions on U.S. ethane—and that bet just got rerated overnight,” quoted Fortune.

FAQs

Why is the US blocking ethane exports to China now?
It’s in response to China restricting exports of rare earth metals, which are vital to US industries, as per Fortune.

What is ethane used for?
Ethane is primarily used to make plastics and other petrochemical products.

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