China's U.S. Ethane Imports Hit Record High Amid Middle East Crisis

China's imports of U.S. ethane are expected to hit a record high in April as petrochemical producers across China and other parts of Asia scramble to secure alternative feedstocks following a sharp decline in naphtha and liquefied petroleum gas (LPG) supplies from the Middle East.

China is forecast to import up to 800,000 metric tons of U.S. ethane this month, according to market estimates, marking the highest monthly volume on record. The figure is around 60% above the average monthly level of imports typically shipped from the United States.

The surge comes as conflict in the Middle East has severely disrupted feedstock supplies to Asian petrochemical producers, cutting off much of the region's usual access to naphtha and LPG. U.S. ethane can serve as a substitute for both materials in certain petrochemical production processes.

The war involving Iran has caused shortages of naphtha and other key petrochemical feedstocks across Asia, forcing producers to cut operating rates. Asia's petrochemical industry is heavily reliant on supplies of naphtha, LPG and methanol from the Persian Gulf.

Trade credit insurer Coface said last month that the conflict in the Middle East was creating a severe supply shock for Asia, the region most vulnerable to disruptions in Gulf supplies.

Industry economists at Coface said that 60% to 70% of Asia's naphtha passes through the Strait of Hormuz, warning that a prolonged disruption could reshape logistics routes, costs, and even the global geographic structure of the petrochemical industry.

Commodity intelligence firm ICIS said during the second week of the conflict that Asia's dominance in the petrochemical sector had been built on a highly concentrated feedstock system, and that a single geopolitical shock could trigger a chain reaction across the region's industrial economy.

U.S. ethane was also thrust into the spotlight during last year's U.S.-China trade war, when the administration of Donald Trump restricted exports to China for several months at the height of the dispute.

Since supplies resumed last summer, U.S. ethane has become the preferred feedstock for Chinese ethylene producers. Ethylene is a key raw material used to manufacture a wide range of plastic products.

The current conflict in the Middle East is expected to deepen China's dependence on U.S. ethane supplies as Asian producers seek to stabilize operations amid ongoing shortages.