Amid escalating tensions in the US-China trade relationship, a Chinese-operated vessel that previously transported ethane to Chinese ports is now making its way to India for the first time.
According to ship tracking data compiled by Bloomberg, the “STL Qianjian” oil tanker is heading to Dahej Port on the west coast of India. Data from Vortexa Ltd. shows that the ship loaded cargo at the Nederland Terminal operated by Energy Transfer LP.
Ethane is widely used in petrochemical production and is a natural gas liquid product derived from shale gas. About half of the ethane exports from the United States flow to China. Previously, due to the Chinese Communist Party’s violation of the preliminary agreement in US-China Geneva negotiations and restrictions on rare earth exports, the US Department of Commerce required US exporters to China to obtain a license from the department before exporting ethane to China, resulting in at least six ethane-carrying freighters being stranded off the US coast.
On June 12, Bloomberg reported that Vortexa analyst Samantha Hartke stated that the operator of this large ethane tanker is China’s Satellite Chemical Co., and the vessel’s journey to Dahej Port in India seems to be a resale of the cargo. She added that this is the second Chinese-operated oil tanker this month to sail to India after loading cargo in the US.
Last week, according to tracking data from LSEG and Kpler, the “STL Qianjian” was anchored along the US Gulf Coast. The ship loaded cargo for China’s Satellite Chemical Company.
Ethane is a byproduct of oil and gas production mainly used in plastic manufacturing. Satellite Chemical Company relies heavily on US ethane to supply raw materials to its large processing facilities.
Adrian Calcaneo, Global Director of Natural Gas Liquids and Naphtha Research at OPIS, stated that most ethane trades are long-term contracts, meaning that “buyers must accept the goods as agreed regardless of market conditions.” He added that buyers have the discretion to decide how to use or resell the ethane.
According to data from the US Energy Information Administration, China imported a record-breaking average of 230,000 barrels of ethane per day from the US last year.
Unnamed traders reported that last week there were spot market quotes for reselling ethane destined for China. They added that a potential buyer could be India’s Reliance Industries Ltd. (RIL), frequently used by ethane buyers, including this private refinery.
Energy Transfer LP owns one of the largest portfolios of crude oil, natural gas, and natural gas liquid assets in the US, primarily located in Texas and the US Midwest.
Both Satellite Chemical Company of China and Reliance Industries Ltd. of India have not immediately responded to Bloomberg’s request for comments via email.
Despite the recent framework agreement reached in the US-China London trade talks, where Beijing vowed to relax rare earth exports and the US would ease export controls on chemicals based on the rare earth export situation, significant differences still exist between the two sides, and it remains uncertain whether the Chinese Communist Party will violate its commitments again.