Iran War Drives China to Record US Ethane Imports, Deepening Energy Dependence

Gate News message, April 20 — China is set to import a record volume of US ethane in April as petrochemical producers seek alternative feedstocks following supply disruptions from the Middle East war. Ethane shipments are expected to reach 800,000 tons in April, approximately 60% higher than the monthly average, according to Chinese consultant JLC.

Ethane, a natural gas liquid used to produce ethylene (a key building block for plastics), is essential for China's petrochemical industry. China depends almost entirely on the United States for supply. The switch to ethane has been driven by the effective closure of the Strait of Hormuz, which has choked off crucial supplies of naphtha and liquefied petroleum gas (LPG) from the Middle East. In February, more than 50% of China's naphtha imports and over 40% of its LPG purchases originated from Persian Gulf nations. Profits to produce ethylene from ethane reached tenfold that of naphtha as of April 15, according to JLC, boosted by crude-linked pricing (oil-indexed price mechanisms).

New production capacity additions have also supported higher demand. A new ethane unit developed by Wanhua Chemical Group and a multi-feed cracker unit by Sinopec Ineos (Tianjin) Petrochemical have both contributed to increased imports this year. US ethane has become the preferred alternative for China's ethylene makers due to stable supply and lower cost.

China's ethane buying surge comes ahead of President Donald Trump's planned visit to Beijing in mid-May, with US energy expected to be part of the agenda. The International Energy Agency warned last week that supply chains to Asia have been thrown into "disarray" as petrochemical feedstocks face the most immediate effects of the war.