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Yahoo
5 days ago
- Business
- Yahoo
US Targets Niche Gas That China Can't Replace as Trade War Chip
(Bloomberg) -- The US is using its dominance of a niche petroleum gas as a bargaining chip in its trade war with China. Next Stop: Rancho Cucamonga! ICE Moves to DNA-Test Families Targeted for Deportation with New Contract Where Public Transit Systems Are Bouncing Back Around the World US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn The Global Struggle to Build Safer Cars America supplies China with almost all of its ethane, a product of the shale boom that's used as a building block for making plastics. But the commerce department is now ordering shippers to apply for export licenses, and has told at least one, Enterprise Products Partners LP, that it intends to withhold permits for three China-bound cargoes. The trade war is throwing a spotlight on how the US and China rely on each other for certain commodities — dependencies that both nations are seeking to leverage as they negotiate terms to resolve their dispute. In this case, America is the world's biggest producer of ethane, which is converted into ethylene for plastics factories, and China is its largest customer. The commerce department has cited risks that petroleum products like ethane could be diverted to the military, copying the playbook deployed by Beijing in justifying restrictions on what it calls dual-use items such as rare earths and other critical minerals. 'Ethane is no longer just a byproduct of shale — it's now a geopolitical weapon,' said Julian Renton, lead analyst covering natural gas liquids at East Daley Analytics. 'China bet billions building infrastructure around US ethane, and Washington is now questioning whether that bet should continue to pay off.' America's shale revolution and China's rapid industrialization have coincided this century to create a market where cheap energy byproducts are parlayed into millions of tons of materials used as trash bags and shampoo bottles, car seats and computer keyboards. But companies that prospered from cooperation are now caught in the crossfire of an increasingly antagonistic trade relationship between Washington and Beijing. Chinese firms such as Satellite Chemical Co. operate giant petrochemical plants that process US ethane almost exclusively. US producers like Enterprise Products Partners and Energy Transfer LP rely on exports, almost half of which go to China, to augment sales in their heavily saturated domestic market. Joint Venture Energy Transfer and Satellite formed a joint venture in 2018 to construct a new export terminal on the U.S. Gulf Coast to provide ethane for the Chinese company's plants. It's an example of how infrastructure that facilitates the ethane trade — from specialized terminals and pipelines to expensive tankers purpose-built to carry the fuel — can revolve around long-term relationships between a single buyer and seller, said Renton. The vessels that ship the gas, dubbed Very Large Ethane Carriers, are another case in point. There are about 30 in the world, according to Kpler ship-tracking data, plying dedicated routes. There's not much of a spot market to absorb dislocations in supply or demand, said Renton. 'These aren't oil tankers that can pivot mid-ocean,' he said. At least one VLEC is now idling off the Gulf Coast waiting for its next move, which looks dependent on the US government's approach to licensing. But there's more at stake than the fate of a few cargoes. 'It throws a wrench into multi-billion dollar, multi-decade commercial planning cycles,' said Renton. --With assistance from Sarah Chen. Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Is Elon Musk's Political Capital Spent? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Business
- Yahoo
US Targets Niche Gas That China Can't Replace as Trade War Chip
(Bloomberg) -- The US is using its dominance of a niche petroleum gas as a bargaining chip in its trade war with China. Next Stop: Rancho Cucamonga! ICE Moves to DNA-Test Families Targeted for Deportation with New Contract Where Public Transit Systems Are Bouncing Back Around the World US Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents Warn The Global Struggle to Build Safer Cars America supplies China with almost all of its ethane, a product of the shale boom that's used as a building block for making plastics. But the commerce department is now ordering shippers to apply for export licenses, and has told at least one, Enterprise Products Partners LP, that it intends to withhold permits for three China-bound cargoes. The trade war is throwing a spotlight on how the US and China rely on each other for certain commodities — dependencies that both nations are seeking to leverage as they negotiate terms to resolve their dispute. In this case, America is the world's biggest producer of ethane, which is converted into ethylene for plastics factories, and China is its largest customer. The commerce department has cited risks that petroleum products like ethane could be diverted to the military, copying the playbook deployed by Beijing in justifying restrictions on what it calls dual-use items such as rare earths and other critical minerals. 'Ethane is no longer just a byproduct of shale — it's now a geopolitical weapon,' said Julian Renton, lead analyst covering natural gas liquids at East Daley Analytics. 'China bet billions building infrastructure around US ethane, and Washington is now questioning whether that bet should continue to pay off.' America's shale revolution and China's rapid industrialization have coincided this century to create a market where cheap energy byproducts are parlayed into millions of tons of materials used as trash bags and shampoo bottles, car seats and computer keyboards. But companies that prospered from cooperation are now caught in the crossfire of an increasingly antagonistic trade relationship between Washington and Beijing. Chinese firms such as Satellite Chemical Co. operate giant petrochemical plants that process US ethane almost exclusively. US producers like Enterprise Products Partners and Energy Transfer LP rely on exports, almost half of which go to China, to augment sales in their heavily saturated domestic market. Joint Venture Energy Transfer and Satellite formed a joint venture in 2018 to construct a new export terminal on the U.S. Gulf Coast to provide ethane for the Chinese company's plants. It's an example of how infrastructure that facilitates the ethane trade — from specialized terminals and pipelines to expensive tankers purpose-built to carry the fuel — can revolve around long-term relationships between a single buyer and seller, said Renton. The vessels that ship the gas, dubbed Very Large Ethane Carriers, are another case in point. There are about 30 in the world, according to Kpler ship-tracking data, plying dedicated routes. There's not much of a spot market to absorb dislocations in supply or demand, said Renton. 'These aren't oil tankers that can pivot mid-ocean,' he said. At least one VLEC is now idling off the Gulf Coast waiting for its next move, which looks dependent on the US government's approach to licensing. But there's more at stake than the fate of a few cargoes. 'It throws a wrench into multi-billion dollar, multi-decade commercial planning cycles,' said Renton. --With assistance from Sarah Chen. Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Is Elon Musk's Political Capital Spent? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Hindu
22-04-2025
- Business
- The Hindu
Sino-U.S. trade war redrawing global LPG trading, outlook
The global liquefied petroleum gas (LPG) market is facing an upheaval as high tariffs on U.S. imports force Chinese buyers to swap American cargoes for alternatives from the Middle East, while U.S. shipments divert to Europe and elsewhere in Asia. The shakeup is expected to depress the shale gas byproducts' prices and demand, hurt the bottom lines of U.S. shale producers and Chinese petrochemical companies, and boost the appetite for alternatives such as naphtha. It is also expected to benefit Middle East suppliers, who are being tapped by the Chinese importers as replacements, and opportunistic LPG buyers in Asia in markets such as Japan and India, who are taking advantage of the product's price declines. Natural gas liquids (NGLs) - propane, ethane and butane - are the latest energy products ensnared in the escalating trade war between the world's two largest economies. China has already halted U.S. crude and liquefied natural gas (LNG) imports. Chinese petrochemical firms reliant on abundant U.S. LPG and ethane supply as feedstock have become the lowest cost producers globally. U.S. oil and gas producers need China to buy their NGLs as domestic supply exceeds demand, and swelling inventories of these products could hurt the economics for shale drillers already facing acute challenges to growth. While U.S. exporters were able to re-route LPG cargoes away from China at the time of trade frictions during U.S. President Donald Trump's first term, the doubling of trade volumes since then makes it difficult for either country to replace the other, said Julian Renton, an NGL analyst at midstream analytics firm East Daley Analytics. "There's a certain amount of flows that could be redirected, but you can't shift 400 kbd to any other market that could take it," he said. China is the second-largest U.S. LPG buyer after Japan, Energy Information Administration data showed. East Daley expects U.S. exports to China could fall by about 200,000 barrels per day (bpd) over six to nine months, leading to higher domestic inventories and depressed prices. Energy Aspects analyst Cheryl Liu expects other LPG importers such as India, Indonesia, Japan and South Korea to buy more of the cheaper U.S. product, while the Middle East ramps up supply to China. "Winners should be all other buyers and Middle East exporters. Losers, I would say, both China and the U.S.," she said. A source at a major Japanese LPG company said unlike Middle East supplies, it is easy to swap U.S. LPG with supply from other countries as U.S. cargoes are not tied to specific destinations. "This will likely accelerate the swapping of U.S. LPG contracts held by the Chinese companies with Middle Eastern, Canadian, and Australian LPG contracts held by Japan, South Korea, Southeast Asian countries and India," he said. "The Chinese will need to offer some incentive to those willing to swap." An Asian LPG trader said Japanese buyers grabbed cheap U.S. imports for end-April and May arrival, with demand mostly from utilities as they restock supply. Japan's U.S. LPG imports are up 12% to 15% on-month so far in April to 274,000-276,000 bpd, provisional data from ship-tracker OilX, and LSEG showed. Data from ship-tracker Kpler showed such imports nearly doubled to 639,000 bpd in April. Indian refiners have asked Middle East suppliers to swap long-term supply with U.S. LPG at discounts to Saudi Contract Price (CP), people familiar with their purchase plans said. China's imports Last year, China bought a record 17.3 million tons, or 550,000 bpd, of U.S. propane, 60% of its total imports of the gas liquid, Chinese customs data showed. Chinese buyers are scrambling still to swap U.S. LPG cargoes for supply from other countries to avoid tariffs, traders said. The tariffs come into effect on May 14. While the costs of such swaps were more than $100 per ton for cargoes arriving in the first half of May, Chinese importers have been less inclined to fork out anything above $50 per ton for second-half May supplies, though some sellers are still demanding around $100 per ton for such swaps, the Asian LPG trader said. Meanwhile, the trade war has bolstered premiums of Middle East LPG arriving in China in May to first-half June to $30-$60 a ton against the benchmark contract price, versus pre-trade-war levels of $20-$30, the trader and two Chinese LPG trading executives said. The sources declined to be named as they are not authorised to speak to media. The tariffs on imports from the U.S. are expected to reduce China's LPG demand by 150,000 bpd in the second half of 2025 from the same period a year ago, while increasing naphtha consumption by 140,000 bpd, according to Energy Aspects. However, these will not fully replace the 1.5 million tons monthly U.S. supply, Celia Chen, lead LPG analyst at oil pricing firm Argus told an online seminar, expecting a drop of 1 million tons per month of supply for China. For ethane, a China-based trade source said ethane-based crackers are maintaining their output as of now as their stocks can last until the second-half of May, but major importers have sought import duty waivers from Beijing given that the U.S. is the sole supplier to China. Satellite Chemical told its investors on April 8 it was seeking a waiver of ethane import tariffs, the company disclosed in a filing to the stock exchange.
Reuters
21-04-2025
- Business
- Reuters
Sino-US trade war redrawing global LPG trading, outlook
SINGAPORE/NEW YORK, April 21 (Reuters) - The global liquefied petroleum gas (LPG) market is facing an upheaval as high tariffs on U.S. imports force Chinese buyers to swap American cargoes for alternatives from the Middle East, while U.S. shipments divert to Europe and elsewhere in Asia. The shakeup is expected to depress the shale gas byproducts' prices and demand, hurt the bottom lines of U.S. shale producers and Chinese petrochemical companies, and boost the appetite for alternatives such as naphtha. It is also expected to benefit Middle East suppliers, who are being tapped by the Chinese importers as replacements, and opportunistic LPG buyers in Asia in markets such as Japan and India, who are taking advantage of the product's price declines. Natural gas liquids (NGLs) - propane, ethane and butane - are the latest energy products ensnared in the escalating trade war between the world's two largest economies. China has already halted U.S. crude and liquefied natural gas (LNG) imports. Chinese petrochemical firms reliant on abundant U.S. LPG and ethane supply as feedstock have become the lowest cost producers globally. U.S. oil and gas producers need China to buy their NGLs as domestic supply exceeds demand, and swelling inventories of these products could hurt the economics for shale drillers already facing acute challenges to growth. While U.S. exporters were able to re-route LPG cargoes away from China at the time of trade frictions during U.S. President Donald Trump's first term, the doubling of trade volumes since then makes it difficult for either country to replace the other, said Julian Renton, an NGL analyst at midstream analytics firm East Daley Analytics. "There's a certain amount of flows that could be redirected, but you can't shift 400 kbd to any other market that could take it," he said. China is the second-largest U.S. LPG buyer after Japan, Energy Information Administration data showed. East Daley expects U.S. exports to China could fall by about 200,000 barrels per day (bpd) over six to nine months, leading to higher domestic inventories and depressed prices. Energy Aspects analyst Cheryl Liu expects other LPG importers such as India, Indonesia, Japan and South Korea to buy more of the cheaper U.S. product, while the Middle East ramps up supply to China. "Winners should be all other buyers and Middle East exporters. Losers, I would say, both China and the U.S.," she said. A source at a major Japanese LPG company said unlike Middle East supplies, it is easy to swap U.S. LPG with supply from other countries as U.S. cargoes are not tied to specific destinations. "This will likely accelerate the swapping of U.S. LPG contracts held by the Chinese companies with Middle Eastern, Canadian, and Australian LPG contracts held by Japan, South Korea, Southeast Asian countries and India," he said. "The Chinese will need to offer some incentive to those willing to swap." An Asian LPG trader said Japanese buyers grabbed cheap U.S. imports for end-April and May arrival, with demand mostly from utilities as they restock supply. Japan's U.S. LPG imports are up 12% to 15% on-month so far in April to 274,000-276,000 bpd, provisional data from ship-tracker OilX, and LSEG showed. Data from ship-tracker Kpler showed such imports nearly doubled to 639,000 bpd in April. Indian refiners have asked Middle East suppliers to swap long-term supply with U.S. LPG at discounts to Saudi Contract Price (CP), people familiar with their purchase plans said. Last year, China bought a record 17.3 million tons, or 550,000 bpd, of U.S. propane, 60% of its total imports of the gas liquid, Chinese customs data showed. Chinese buyers are scrambling still to swap U.S. LPG cargoes for supply from other countries to avoid tariffs, traders said. The tariffs come into effect on May 14. While the costs of such swaps were more than $100 per ton for cargoes arriving in the first half of May, Chinese importers have been less inclined to fork out anything above $50 per ton for second-half May supplies, though some sellers are still demanding around $100 per ton for such swaps, the Asian LPG trader said. Meanwhile, the trade war has bolstered premiums of Middle East LPG arriving in China in May to first-half June to $30-$60 a ton against the benchmark contract price, versus pre-trade-war levels of $20-$30, the trader and two Chinese LPG trading executives said. The sources declined to be named as they are not authorised to speak to media. The tariffs on imports from the U.S. are expected to reduce China's LPG demand by 150,000 bpd in the second half of 2025 from the same period a year ago, while increasing naphtha consumption by 140,000 bpd, according to Energy Aspects. However, these will not fully replace the 1.5 million tons monthly U.S. supply, Celia Chen, lead LPG analyst at oil pricing firm Argus told an online seminar, expecting a drop of 1 million tons per month of supply for China. For ethane, a China-based trade source said ethane-based crackers are maintaining their output as of now as their stocks can last until the second-half of May, but major importers have sought import duty waivers from Beijing given that the U.S. is the sole supplier to China. Satellite Chemical ( opens new tab told its investors on April 8 it was seeking a waiver of ethane import tariffs, the company disclosed in a filing to the stock exchange.
