博彩对冲

China is considering lifting import tariffs on some US goods, including ethane, and may already have granted some exemptions, industry sources say.

A document listing 131 products said to be under consideration for tariff exemptions was shared with 博彩对冲 on Friday. The list, which could not be verified, showed that Beijing is preparing to waive tariffs on US ethane but not LPG, crude oil or LNG, possibly reflecting China鈥檚 dependence on the world鈥檚 only large-scale ethane exporter.

Chinese ethane crackers, which produce petrochemicals, relied on US ethane for 99% of their 255,000 barrels per day of imports last year.

The list of goods that would be exempt from tariffs also included some semiconductors made in the US and some types of aircraft and aircraft parts.

China imposed retaliatory tariffs of 125% on all US imports effective Apr. 12 after US President Donald Trump ramped up levies on Chinese goods to 145%.

It was not immediately clear on Friday whether China鈥檚 tariff exemptions had been finalized or were merely circulated for discussion.

Beijing may not announce the exemptions officially to avoid acknowledging the pain caused by the levies and keep US exporters on their toes.

But a move to lift tariffs on some US products would ease the pressure on some Chinese producers and mirror a similar move by the US administration earlier this month to temporarily lift tariffs on some Chinese electronics.

China's tariff exemption list could cover more than $46 billion worth of US imports and at least 28% of China's imports from the US based on 2024 figures, Rand China Research Center鈥檚 Gerard Di Pippo said on social media platform X.

Ethane Exemption

A China-focused analyst told 博彩对冲 that 鈥淐hina was already planning to exempt ethane from the US tariffs. I don鈥檛 think there will be a final version of the document,鈥� the source noted, adding that buyers would be directly informed.

鈥淭here was market talk yesterday that ethane has been exempted from [US] tariffs. Our sources at the related plants have also mentioned it, so I think it is possible,鈥� another China-focused analyst said.

With no other large-scale ethane exporters available globally, Chinese crackers would struggle to replace US ethane.

Indeed, privately owned Satellite Chemical operates China鈥檚 only fully ethane-based cracker and may be forced to shut down the cracker temporarily if no ethane alternatives are found.

Ethane is also used in mixed-feed crackers, which, in the absence of a tariff exemption, were expected to run more LPG or naphtha to compensate for the lack of ethane.

US LPG Not Listed

Chinese LPG importers are also seeking US tariff exemptions, but LPG (propane and butane) was not among the products listed in the document.

Propane was the US鈥� second-largest export to China last year, worth $11.78 billion, and second only to US soybean exports. As such, Chinese tariffs on US propane are causing headaches for US exporters.

But US propane also accounted for 59% of China鈥檚 propane imports last year. Companies are now scrambling to replace the 549,000 b/d of US propane volumes headed mainly to propane dehydrogenation (PDH) plants for use as a feedstock to produce propylene.

An LPG trader also confirmed that the circulating list of exempted products is not official yet, adding that Chinese LPG buyers may hopefully get the tariff exemption they applied for.

If they don鈥檛 get the exemption, they will 鈥渂ear the pain together,鈥� the trader added.

Other LPG exporters could step in. Middle East producers are ramping up LPG exports as they increase crude production, and cargo swaps with other Asian buyers may be possible, albeit at an added cost for Chinese buyers.

China鈥檚 second-largest (unofficial) LPG supplier is Iran, which delivered 266,000 b/d to China last year, just below the record 277,000 b/d exported in 2023, via ship-to-ship transfers in the Middle East or offshore Malaysia.

But Iran has limited spare capacity and is struggling with its own energy crisis, making it unlikely that it will ramp up volumes to China. Moreover, US sanctions this week against an Iranian LPG network could make potential buyers wary.

Chinese buyers also bought Canadian LPG at benchmark Argus Far East Index (AFEI) plus $1.40 per barrel delivered last week, a significant price jump from deals done before the trade war, the trader said. AFEI is the benchmark for LPG prices in Asia. Canada exported just 94,000 b/d of LPG to all destinations last year 鈥� all of it propane, according to Kpler data.

Alternative sources of imports will not be sufficient to fully replace US propane. Chinese refiners are also ramping up LPG output and selling it to PDH plants. Mixed-feed crackers, which use LPG, naphtha or ethane as feedstocks, will also be using more naphtha. But there will still be a shortage of propylene and other petrochemicals, forcing China to import more, Chinese consultancy SCI said in a webinar on Thursday.