Due to the impact of the situation in Iran, the supply of naphtha in the Middle East has been disrupted, leading Chinese ethylene producers to turn to American ethane as an alternative raw material to replace naphtha in manufacturing. It is expected that China’s imports of American ethane in April will reach a new record high.
According to a report from Bloomberg citing the market forecast for this month from JLC, a Chinese energy and petrochemical market information company, China is expected to import around 800,000 tons of American ethane in April, approximately 60% higher than the previous monthly average import volume.
Analysis suggests that due to the situation in Iran affecting the supply chain, the closure of the Strait of Hormuz has disrupted the supply of naphtha and liquefied petroleum gas in the Middle East, leading to a sharp increase in naphtha prices used as a raw material for producing ethylene, prompting Chinese ethylene manufacturers to seek alternatives.
Based on data from the Chinese Customs, over 50% of naphtha imports and more than 40% of LPG imports in February this year were from Persian Gulf countries.
As American ethane supply is stable and costs lower, some Chinese companies have shifted to using American ethane as the preferred alternative raw material for naphtha.
Shi Linlin, a refining industry analyst at Jinlianchuang, stated that as of April 15th, the profit from producing ethylene using ethane is 10 times higher than that of naphtha, mainly due to the significant increase in naphtha prices linked to crude oil prices.
Ethane, a natural gas liquid extracted mainly during natural gas processing, is a key component in the petrochemical industry. It is primarily used as a raw material for producing ethylene, which is essential in manufacturing various products including plastics, resins, and synthetic rubber.
While China has domestic ethane resources, the low recovery rate of ethane from associated gas and the high cost of specialized equipment for separating ethane limit the availability of domestic ethane, leading to high dependency on imports.
The U.S. is a major exporter of ethane, benefiting from abundant shale gas reserves that provide a significant amount of ethane production, along with specialized export terminals and vessels. The U.S. Energy Information Administration (EIA) forecasted a 14% increase in net ethane exports in 2025 and a further 16% increase in 2026.
With the changing international situation, China’s surge in imports of American ethane has exceeded previous predictions by the U.S. EIA in October of last year.
The EIA noted at the time that U.S. developers are expanding ethane export capacity to meet the growing global demand for ethane as a petrochemical feedstock, especially in China. Despite new facilities and projects boosting American ethane exports, uncertainties may arise post-2026 due to slowed demand growth and regulatory changes. In May, the U.S. Department of Commerce’s Bureau of Industry and Security issued a notice requiring special export licenses for American ethane exports to China, leading to delays in two planned ethylene cracking units in China and a potential shift from ethane to naphtha as the raw material. This regulation expired on July 2, 2025.
Amid China’s significant purchases of ethane, President Trump’s planned visit to Beijing in mid-May is expected to address U.S. energy issues in the summit agenda. The importance of this topic may escalate further if the Iran conflict continues to delay progress.
Last week, the International Energy Agency (IEA) stated that “petrochemical feedstocks are the most directly affected area in this war,” with supply chains in Asia facing “disarray.” Not only are Chinese manufacturers adjusting their raw material supply chains, but Japan, too, is scrambling to source naphtha imports from the U.S. and Africa.