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Investing.com - U.S. ethane exports to China have resumed after restrictions were lifted in early July, but uncertainty remains ahead of the August 12 trade deadline imposed by the U.S. government.
The U.S.-China ethane trade, previously described as symbiotic with China receiving most of its ethane from the U.S. and about half of U.S. ethane exports going to China, was disrupted in late May when the U.S. restricted exports on national security grounds. This restriction stranded an estimated 100,000 barrels per day of ethane in the U.S., forcing prices into deeper contango to encourage storage injections.
Butane was also included in the export restrictions to China, but the impact was minimal as only about 5% of U.S. butane exports typically go to China. The more established liquefied petroleum gas (LPG) market allowed for easier rerouting of these products compared to the developing ethane export market.
U.S. natural gas liquid (NGL) inventories have reached seasonal highs due to the combination of ethane export restrictions and rapid replenishment of propane stocks, which have flipped from an 8% deficit to a 7% surplus despite exports running near maximum capacity. Growing supply and potential headwinds from oil prices create a challenging price outlook for NGLs this fall, especially for ethane if U.S.-China trade negotiations stall.
The export market remains a bright spot for liquids, with nearly 600,000 barrels per day of U.S. LPG export capacity and about 300,000 barrels per day of ethane export capacity expected to enter service by the end of 2026, potentially limiting downside to NGL prices next year as more Gulf Coast ethane cracker capacity comes online.
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