The US has exported ethane to China on a very large ethane carrier (VLEC) for the first time despite the ongoing trade war between the two countries.
According to cargo intelligence provider Kpler, the 83,757-cbm JS Ineos Marlin (built 2019) is sailing for China via the Panama Canal after loading a combined 850,000 barrels of ethane at Marcus Hook in Pennsylvania and Morgan’s Point in Texas.
The shipment is destined for Taixing in Jiangsu province, where SP Chemicals will this year commission a new gas cracker with production capacity of 650,000 tonnes of ethylene per annum.
Long-term charters
Kpler earlier reported the smaller, 27,500-cbm multigas carrier JS Ineos Inspiration (built 2016) is engaged in a similar shipment after loading 270,000 barrels of ethane at Morgan’s Point.
The JS Ineos Inspiration is due to arrive in Taixing in late July, and the JS Ineos Marlin in the second half of August.
Evergas, which commercially manages the duo, confirmed to TradeWinds that the ships are carrying US ethane to China.
Both vessels were ordered by Evergas' parent company Jaccar Holdings. They are on long-term charters to UK-headquartered chemicals firm Ineos.
The latest cargo movement can be seen as Ineos’ first step towards fulfilling its long-term ethane supply contract with SP Chemicals that was announced in late 2017.
With rising shale production in the US, the country's net surplus of ethane is forecast to increase to 300,000 barrels per day (bpd) in 2019 from 260,000 bpd last year, according to the US Energy Information Administration.
While historically the main buyers of US ethane have been European and Indian ethane crackers, China is widely expected to emerge as a top destination with expanding petrochemical production capacity.
Importing large quantities of US ethane could bring mutual benefits to the Chinese and US energy industries
China Classification Society
US ethane surplus
Despite China and the US being engaged in a tit-for-tat trade war since last year, Beijing has so far refrained from imposing additional tariffs on imports of US ethane.
China is widely expected to significantly ramp up imports of US energy products as part of a trade resolution, which could be reached by the end of the year.
A dozen ethane crackers have been proposed or are under construction in China, which could lift the country’s ethane imports by 20.9 million tonnes per annum if all pan out, based on China Classification Society (CCS) forecasts.
“Importing large quantities of US ethane could bring mutual benefits to the Chinese and US energy industries,” CCS said.
