Due to the trade war with the United States, which has caused an increase in the cost of American raw materials in China, some Chinese chemical factories that produce chemicals for improving gasoline quality have temporarily ceased operations.
According to a report by Bloomberg on May 6th, pricing report and analysis company ICIS stated that Shandong Lushenfa Chemical Co., Ltd., Anqing Taiheng Chemical Technology Co., Ltd., and Anqing Tai Fa Energy Technology Co., Ltd. halted production last month. These companies produce Methyl Tert-Butyl Ether (MTBE) from liquefied petroleum gas.
These private chemical manufacturers have not responded to Bloomberg’s request for comments.
In retaliation to the tariffs imposed by the Trump administration, Beijing has imposed high tariffs on a variety of American imports, which has severely affected the Chinese plastics and petrochemical industry. A significant portion of China’s plastics and petrochemical industry heavily relies on American raw materials. As a result, Chinese buyers have been forced to seek alternative supplies from the Middle East and Canada, but these alternative products often come at higher prices.
Rising economic costs have prompted the Chinese government to quietly exempt tariffs on some American goods. According to Vortexa, at least two Chinese companies importing ethane (used in plastic manufacturing) from the United States have been granted tariff exemptions.
The United States is the sole supplier of ethane to China. According to the Energy Information Administration (EIA) data, China purchases about half of its ethane exports from the United States every year. Chinese companies that rely on American ethane include Satellite Petrochemical, Xin Pu Chemical, Sinopec, Sanjiang Fine Chemical, and Wanhua Chemical Group. Major exporters from the United States include Enterprise Products Partners and Energy Transfer Partners.
ICIS reports that the Chinese chemical industry has seen the commissioning of many new factories, leading to an oversupply issue in the industry, while the US-China trade war has brought a new wave of challenges to the Chinese petrochemical industry.