Middle East War Deepens China's Reliance on US Ethane; April Imports Expected to Hit Record High

BEIJING, April 20 (CNA) -- The Middle East conflict has disrupted critical raw material supplies for China's petrochemical companies, forcing them to seek alternatives and pushing China's ethane imports from the United States to an expected record high this month.

Bloomberg News reports that China-based commodity consultancy JLC estimates that China's imports of US ethane will reach an unprecedented 800,000 metric tons this month, an increase of about 60% from the historical monthly average.

Following the US and Israel's commencement of conflict on February 28th, which led to the effective closure of the Strait of Hormuz, some Chinese companies may have shifted to using ethane to mitigate the impact of disruptions in the supply of light oil and liquefied petroleum gas (LPG) from the Middle East.

Ethane is a natural gas liquid (NGL) primarily used to produce ethylene, a fundamental building block for plastics.

As China's ethane supply is almost entirely dependent on the US, this commodity became a heated political issue between the two countries last year after Washington tightened export controls during the US-China trade war.

According to JLC analyst Shi Linlin, US ethane has become a preferred alternative for Chinese ethylene manufacturers due to its stable supply and lower cost.

JLC data shows that as of April 15th, the profit from producing ethylene using ethane was 10 times that of using light oil, as light oil prices have surged due to their linkage with crude oil.

Official Chinese data indicates that in February, prior to the US-Iran conflict, China imported over 50% of its light oil and over 40% of its LPG from Persian Gulf countries.

US President Donald Trump is scheduled to visit China in mid-May, where US energy supplies are expected to be one of the discussion topics. If the US-Iran war continues, the importance of this issue may significantly increase. (Editor: Chang Cheng-chiu) 1150420

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