U.S. Allows Ethane To Be Shipped To China But Not Unloaded Without Permission

The U.S. has sent letters to Enterprise Products and Energy Transfer, informing the companies that they could load ethane on vessels destined for China but could not unload the ethane there without authorization, according to a person familiar with the matter and a copy of one letter, Karen Freifeld reported for Reuters.

The companies are highly unlikely to risk loading the ethane and sending the vessels on their way. I Photo: GTT

The letters from the U.S. Department of Commerce follow a licensing requirement imposed several weeks ago on the companies’ exports of ethane to China, which halted shipments and led to vessels anchoring in or hovering around the U.S. Gulf Coast.

The letters may signal that the U.S. is preparing to lift restrictions imposed on exports to China in late May and early June, as the U.S.–China trade war shifted from retaliatory tariffs to curbs on each other’s supply chains.

With China granting rare earth export licenses to some firms and saying it would speed up the approval process, the U.S. now appears close to permitting ethane exports to China.

Still, the companies are highly unlikely to risk loading the ethane and sending the vessels on their way, the person familiar with the matter said. If the vessels reach China, it may be difficult to prevent them from offloading the ethane, and the companies could face penalties of up to twice the value of the shipment if they do.