US loosens ethane export ban to China; conditions applied

The US Department of Commerce has issued new letters to top energy exporters Enterprise Products and Energy Transfer, easing, but not eliminating, the recently imposed restrictions on ethane exports to China. The letters, first reported by Reuters, authorise the companies to load ethane onto tankers and transport it toward China, but restrict unloading the cargo at Chinese ports without explicit government approval. The move marks a slight relaxation of the strict curbs introduced in late May and early June, which halted ethane shipments altogether and left multiple tankers stranded off the US coast.

Enterprise and Energy Transfer, two of the largest US ethane exporters, had several ships stuck in limbo as inventories of the petroleum byproduct began to rise domestically. The letter from the Bureau of Industry and Security (BIS), a division of the Commerce Department, said, “This letter authorises Enterprise Products to load vessels with ethane, transport and anchor in foreign ports, even if... to a party located in China.” It added, “However, Enterprise Products may not complete such export... to a party that is located in China," without further authorisation.

Strategic pressure, tactical pause

The initial restrictions were part of the Trump administration’s broader strategy to counter China’s tightening grip on critical materials, particularly rare earth elements essential to US technology and defence industries. Days before imposing the ethane export restrictions, the administration also curbed US exports of chip design software, jet engines, and nuclear power components.

With the petrochemical sector in China heavily reliant on US ethane, accounting for nearly half of all US exports of the gas, industry experts warned that the embargo could create major disruptions on both sides. Ethane is a key input for plastics and other petrochemical products, and China’s rapidly growing sector has made long-term bets on continued US supply.

Risk still looms for shippers

Despite the apparent policy softening, energy exporters remain cautious. While they are now allowed to load and dispatch vessels, they risk penalties as high as twice the value of a shipment if a vessel unloads ethane in China without prior authorisation.

Experts say companies are unlikely to take the risk without clear indications that offloading will be permitted upon arrival. Although the 30-day transit time from Houston to China gives some room for potential policy shifts, particularly as negotiations between Washington and Beijing evolve.

The ethane export curb came amid high-stakes trade talks, in which the US sought access to rare earth materials exports from China. In recent days, China has shown signs of compromise, granting export licences and pledging faster processing of applications. Observers believe the US may be using this partial relaxation on ethane as a bargaining chip to extract further concessions.