Energy Transfer corporation finds American ethane restrictions posing challenges for business deals with China
In a significant turn of events, the temporary ban on U.S. ethane exports to China in late May 2025 has marked a pivotal point in U.S.-China energy diplomacy, prompting both sides to reconsider how to safeguard critical petrochemical trade.
The ban, which lasted for over a month, caused over half a dozen ethane vessels to stall along the Gulf Coast. This disruption led to a 11.5% year-over-year drop in Energy Transfer's net income in Q2 2025, as well as financial challenges for other U.S. exporters like Enterprise Products Partners, which rely heavily on China as their largest export market.
The U.S. export licensing requirement and a 125% tariff imposed by China in April 2025 highlighted the risks in the U.S.-China ethane trade link. The long-term impact has been damaging to U.S. exporters and has introduced uncertainty and shifts in the global petrochemical market.
The loss of a major export market and trust issues have been key consequences. The export controls and trade "weaponization" during the Trump administration led to a 40-day period of uncertainty, followed by disruptions that caused Chinese buyers to become "gun-shy" or hesitant to commit long-term contracts. Energy Transfer noted the restrictions have "put a black eye" on the industry and country, with Chinese firms possibly being more reluctant to deal with U.S. exporters going forward.
When exports to China were restricted, Indian buyers stepped in to fill the demand gap, but this did not fully compensate for the lost China volume. The uncertainty also contributes to underused U.S. export infrastructure for ethane. A cautious global investment environment for petrochemicals and China's diversification into LPG and mixed-feed crackers reduce demand growth prospects for U.S. ethane exports.
Before these export restrictions, U.S. ethane was seen as a cheap, abundant, and geopolitically insulated feedstock for global petrochemicals. However, the trade war and export controls have revealed the vulnerability of the supply chain to political tensions and national security policies.
Market analysts see possible futures including a demand plateau with slower petrochemical investment and diversification away from U.S. ethane by China and Europe, perpetuating underutilization of U.S. export capacity.
Enterprise's CEO Jim Teague warned that such measures rarely impact intended targets and often damage domestic industries instead. One buyer shifted to naphtha amid the uncertainty, indicating broader global hesitancy. Flexi-crackers may continue using naphtha to avoid future disruptions in U.S. ethane imports.
Chinese companies are exploring ways to diversify feedstocks or build domestic ethane capabilities. In 2024, the United States exported approximately 4.7 million tons of ethane to China, representing roughly half of its total ethanol exports.
Sarah Tancredi, an experienced journalist specializing in environmental and climate crisis issues, with a focus on informing the public and promoting sustainable solutions, has been covering this story closely. Chinese firms like Satellite Petrochemical have considered switching to naphtha due to the temporary disruption in U.S. ethane exports. Major exporters like Energy Transfer and Enterprise Products Partners had emergency export requests denied during the ban.
In summary, while the immediate ban on exports was lifted, the long-term impact has increased trade risks and market fragmentation, made China more cautious in its purchasing approach, and challenged U.S. exporters' ability to fully leverage their position as the sole large-scale ethane supplier globally. This may result in reduced U.S. exporter revenues and more complex global petrochemical supply chains going forward.
- The temporary ban on U.S. ethane exports to China in late May 2025, a significant turn of events, has led to reporting about the impacts on the petrochemical industry, particularly on U.S. exporters like Energy Transfer and Enterprise Products Partners.
- The disruption in U.S. ethane exports has caused a shift in the industry, prompting Chinese firms like Satellite Petrochemical to consider switching to naphtha as an alternative feedstock, as reported by Sarah Tancredi, a journalist specializing in environmental and climate crisis issues.
- Courses on sustainability and environmental studies may emphasize the significance of the U.S.-China ethane trade as a case study for safety measures in the energy sector, considering the financial challenges faced by U.S. exporters and the uncertainty introduced by the trade disruptions.
- The ESG (Environmental, Social, and Governance) in the finance industry may be reviewing the U.S.-China ethane trade situation to evaluate the potential risks for energy companies involved in petrochemicals exports, given the fragility of the supply chain revealed by the export restrictions.
- As the global energy landscape continues to evolve, it is important for businesses to focus on implementing green and sustainable solutions in their operations to capitalize on the increasing demand for environmentally friendly products, mitigating the potential negative impact of political tensions on their supply chains.
