The US has halted the export of ethane to China. Could raw material prices soar again?

With the implementation of the US policy of halting the export of ethane to China, the global energy market will witness a series of new changes. On the one hand, other countries may increase their supply of ethane to China to fill the market gap. On the other hand, China's chemical enterprises may increase their investment in the research and development of alternative raw materials and the improvement of production technologies. Furthermore, international energy prices may also be affected and fluctuate as a result. Overall, in the new international political and economic environment, "diversification" and "self-sufficiency" will become the new trends in the energy strategies of various countries.

Almost all of China's imported ethane indeed comes from the United States.

If the United States were to cut off the supply of ethane, would China's chemical industry suffer huge losses and shocks?

According to the data released by the EIA in its "Petroleum Supply Monthly Report", in 2024, China imported a total of 11 million tons of ethane from the United States in one go, with approximately 95% of it coming from the United States.

Key Data Comparison of Ethane between China and the United States (2024)
Index	China	USA
Ethane production	Not disclosed (Domestic production rate <30%)	61 million tons per year (56% globally)
Ethane consumption	About 11 million tons	Average daily consumption of 2.3 million barrels + 470,000 barrels (export)
Import/Export volume	Import 11 million tons (95% from the United States)	46% of the total exports flow to China
Main application	Cracking to produce ethylene (over 90%)	Domestic ethylene production (60%)+ export
Key Challenges	High import dependence (>70%) and rising tariff costs	Exports rely on China and storage costs are high

In that year, the output of ethane in the United States reached a record high of 61 million tons, accounting for more than half of the global share. Moreover, nearly 46% of it was sold to Chinese chemical plants.

 

From the above data, the ethane trading is symbiosis, America's huge ethane capacity, around the world on China also ability to digest. Shale gas resources is extremely rich in the United States, after 2013 years of shale oil and gas extraction technology by leaps and bounds set off a revolution, shale oil companies to extract crude oil and natural gas, and can produce rich in large amounts of ethane associated gas, content is higher than the ethane content of Middle East oil field.

Overbuilt over the years, leading to the ethane ethane yield about 3 million barrels a day in the year 2023, but the domestic only digest 2 million barrels, the remaining 1 million barrels have to export, or excess capacity, overcapacity will lead to storage costs. Americans treat excess the practice of ethane, is to inject gas, which not only affects quality of life by the combustion of natural gas, and the extra a conversion device takes a huge sum of money.

According to the global Energy independent consultancy Rystand Energy data, as of April 11, 2025, the day the chemical plant every tons ethane, local processing will lose $184. But in the absence of big tariffs, the United States a ton ethane oil company sold to China, can make more than $100.

So American oil and gas companies are quite willing to sell the excess ethane to China for digestion.

But the fact that  if China can not import from the United States now, does not mean that China cannot produce by himself or purchase from Qatar, Saudi Arabia or Australia at a slightly higher price.

That China tens of millions of tons of ethane have use every year? Is ethane indispensable for the operation of chemical plants in China? Because of ethane to ethylene steam cracking unit production, this thing is because of ethylene to synthetic rubber, plastic, and even industrial alcohol. By the end of 2024, China was a total of seven sets of ethane cracking into ethylene plant, ethylene capacity is 6.75 million tons a year, but note that a year only four sets of devices to import oxide as raw materials, production capacity of 5.35 million tons, it means that the other three sets of device without oxide as raw materials.

Indeed, the remaining three sets, there are two obvious is homebred ethane, but China is not only the seven sets of equipment, in 2024 we produced a total of 35 million tons of ethylene, but use most raw material is actually "naphtha", the second is methanol, the last is import ethane.

So when it comes to the claim that China imports 95% of its ethane to the United States every year and that Chinese chemical plants will come to a standstill if the US cuts off the supply of ethane, it is completely discussing the quantity without considering the issue.

The fact is that the vast majority of cracking units in China use naphtha as raw material, with a proportion of approximately 68%. The share of ethylene produced entirely from ethane accounts for only about 13% of the total production capacity. China chemical and plastics factory, in general, most in need of raw materials, is actually a vinyl, but not ethane cracking of ethylene raw material, now even the appearance of a new technical route, wind power, solar electricity after hydrogen production, hydrogen and carbon dioxide, methanol, finally using methanol as raw materials cracking into ethylene, ethylene propylene.

In fact, the US's refusal to issue ethane licenses this time has actually made the local ethane manufacturers and oil and gas companies in the US extremely anxious. Every day the inventory is in hand, the cost increases every day.

The most powerful domestic ethane extraction equipment is from Zhongtai Company. They have already mastered their self-developed cryogenic separation technology, increasing the efficiency of extracting ethane from domestic shale from 60% to 95%.

Says wang, a professor at the university of petroleum in China, in the short term, this will impact on relevant domestic enterprises, pushed up the cost. Ethane is mainly used for the production of ethylene, but this production route accounts for only 8% of the domestic ethylene production capacity (about over 4 million tons). In the long term, the impact is limited.

Currently, the operating rate of China domestic ethylene production capacity is 85%. If the market supply tightens, raising the operating rate to 90% can alleviate the tight market situation.