US ethane exports to rise as China lifts tariff on imports: EIA

US ethane exports will rise in 2025 and 2026, with flows to China likely to continue as a tariff on imports from the US has been lifted, the US Energy Information Administration said May 6.

The EIA expects the US will export 540,000 b/d of ethane in 2025 and 640,000 b/d in 2026, up from 492,000 b/d in 2024, the EIA said in its Short-Term Energy Outlook.

The ongoing tariff situation between the US and China could have slowed exports, considering that China imports roughly half of all US ethane exports.

However, the EIA was confident that China has waived its tariff on ethane imports from the US.

"As of the time of publication of the May STEO forecast, China has waived a 125% tariff on US ethane imports," the EIA said in its STEO report. "Although there is uncertainty related to the changing tariff policies, we forecast US ethane production will rise in 2025 and 2026 because of higher US exports of ethane in both years."

The EIA expects US ethane production to climb to 2.9 million b/d in 2025 and 3.1 million b/d in 2026, up from 2.8 million b/d in 2024.

"US ethane exports have been increasing because of higher global petrochemical demand, ethane that is low cost compared with other feedstocks, and a growing, higher capacity tanker fleet to ship the ethane," the agency said.

Beijing quiet

A market source familiar with the situation said it is unlikely that Beijing will make a public announcement on the subject.

Other sources said there's a possibility the heavily subsidized Chinese petrochemical industry is mitigating the tariffs to maintain a secure supply chain, which benefits both countries, thus allowing both sides to save face.

Without US supply, Chinese ethane importers were left with limited options, given the US is "nearly the sole supplier of bulk ethane shipments globally," according to a recent report from S&P Global Commodities at Sea, a unit of S&P Global Commodity Insights.

According to May 7 flow data from Commodities at Sea, there are eleven vessels in transit from the USGC to the Far East carrying 7.8 million barrels of ethane in total. Of this almost 900,000 barrels are expected to arrive May 13, ahead of the tariff deadline.

Slightly higher US Gulf Coast ethane prices reflect some confidence exports will continue.

Prices of ethane on May 7 at Enterprise's Mont Belvieu terminal were assessed by Platts at 25 cents/gal, up from 22.5 cents/gal April 22. Platts is a unit of S&P Global Commodity Insights.

Exporters confident flows will continue

Major US NGL exporters have expressed confidence that flows would continue in recent earnings calls.

Energy Transfer Co-CEO Marshall McCrea said May 6 its NGLs export business had not seen any effects from Chinese tariffs.

"Regardless of what everybody is hearing about all the negativity around what's going on in China and other areas, we're not having a problem finding a home for our product," he said on the company's earnings call. "In fact, we did a deal this morning for another ethane spot cargo to China."

Energy Transfer will place its 250,000 b/d Flexport expansion at its Nederland NGLs export terminal in stages throughout 2025.

"We expect to begin ethane service later this month and propane service in July, and we continue to expect to begin ethylene export service in the fourth quarter of this year," co-CEO Thomas Long said on the call.

Enterprise Products Partners also did not express undue concern.

"[It] appears China is going to exclude ethane and ethylene from their tariffs, to protect their petrochemical business. Currently, LPG has not been excluded from the Chinese part tariffs, but admittedly, the situation is fluid," Enterprise CEO Jim Teague said April 29.

Enterprise's ethane exports are fully contracted, he said.

Enterprise is one of the largest US midstream companies and a major player in the ethane market. Its Morgan Point Ethane Export Terminal located 30 miles east of Houston, Texas, is the world's largest and can load as much as 10,000 barrels per hour of fully refrigerated ethane.

Teague said "the market has already gone to work rerouting barrels between the world's biggest LPG suppliers, the US and the Middle East and the biggest importing countries being China and India."

Teague said the company recently signed some contracts with Southeast Asian companies, "and they are not small."

"It's important to note that even before the tariff calls, nominations at our docks from May indicated that our customers' behavior was virtually unchanged from prior months," he said.

Teague said he has no doubt the Donald Trump administration understands the importance of hydrocarbons in the US economy.

"Amid all this uncertainty, I have the core belief that when the dust settles the endgame of this administration's policies, laws and regulations is intended to promote US energy, not just for the next four years, but for decades," he added.

Enterprise has limited direct exposure on ethane exports to China. While it has no contract with China, it sees its customers export between 40% and 50% of their volumes to China.

Negotiations ahead

Negotiations set for May 9-12 in Switzerland between US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer and China's Vice Premier He Lifeng, along with other economic officials are likely to provide clarity on ethane exports amid a bigger discussion on how to forge a comprehensive trade deal which will benefit both countries.

The meeting will be the first talks between the two sides since US President Donald Trump announced tariffs on April 2. (FACTBOX: Trump imposes 90-day pause on country-specific tariffs, increases duties on China).

Both sides have been signaling the need to lower tariffs and counter-tariffs, which Bessent has called unsustainable, and China said it is willing to negotiate.