[Source/Observer Network Qi Qian] US President Trump triggered the Sino-US trade war and backfired, causing American propane to temporarily lose the Chinese market.
According to a May 26 Bloomberg report, after the easing of Sino-US trade tensions, many Chinese plastic factories are still reluctant to re-import US propane and have turned to Canada and the Middle East. The report suggests that this highlights the difficulty in restoring previous business ties between the two major economies. Analysts pointed out that considering the current tariffs, the profit from using US propane is "not substantial," and there will not be a large amount of propane shipped from the US to China unless prices fluctuate.
Propane is a liquefied petroleum gas (LPG) used for heating and producing plastic products.
Data shows that before Trump's administration took office in 2024, nearly 60% of China's LPG imports came from the US. According to data from the US Energy Information Administration, China was the second-largest buyer of US LPG after Japan. Customs General Administration data shows that in 2024, China imported 35,682,100 tons of LPG, with 18,007,700 tons imported from the US, accounting for more than half.
Before Trump took office, nearly 60% of China's LPG imports came from the US. Bloomberg chart.
As the US government again proposed so-called "reciprocal tariffs," China implemented reciprocal countermeasures. The report stated that this actually made US energy sales to China unfeasible. After toughing it out for a month, Trump finally decided to take a step back. High-level economic talks between China and the US were held in Geneva, Switzerland, on May 10-11. Both sides agreed to reduce tariffs within 90 days, lowering the tax rate by 115%.
However, US traders told Bloomberg that after the US-China tariff "ceasefire," buyers got a breather, but they remain cautious about resuming purchases of US propane, fearing that Trump's tariff policies will continue to change frequently. These unnamed traders said that as of last week, China's propane dehydrogenation facilities (PDH) are still importing goods from Canada and the Arabian Gulf. It is reported that these facilities are facilities that convert propane into basic raw materials for plastics.
They also revealed that as more Chinese buyers become satisfied with alternative supplies, the premium of global propane trading prices over the benchmark price is narrowing. This may indicate that sellers outside the US are willing to long-term compete for China's business. China is the world's largest plastic producer and a supplier to major global consumer markets such as Europe and the US.
The traders also mentioned that Saudi Arabia's latest benchmark price was set in April at approximately $600 per ton. Last week, a Chinese buyer purchased a batch of propane from the Arabian Gulf at a price $30 higher than Saudi Arabia's July contract price. A few weeks ago, the premium for propane was $70 per ton, which has now narrowed. They said that Chinese buyers are still purchasing liquefied petroleum gas from the Arabian Gulf.
Samantha Hackett, head of Americas market analysis at Vortexa, a cargo tracking and analysis company, said that considering the current tariffs, the profit from using US propane is "not substantial," only about $20 per ton. She indicated that unless the price of US propane falls or the price of alternative supplies rises, "there will not be a large amount of propane shipped from the US to China."
As early as April, some US media noticed changes in the propane trade between China and the US. At that time, Bloomberg reported that high tariffs forced Chinese buyers to replace US products with Middle Eastern LPG, and the impact on global trade is becoming apparent. It was revealed that up to seven ships carrying US LPG originally scheduled to arrive in China in May and June are now heading to India and Southeast Asia. In exchange, Middle Eastern LPG sold to these buyers will supply China.
Drewry Shipping Consultants analyzed that China's countermeasures will cause problems for US exports. The expansion plan for US terminals may face delays, inventory accumulation, which will increase costs, make LPG hard to find buyers, forcing producers to sell products at low prices or restrict production, leading to continuous losses for US LPG producers.
In fact, Trump's tariff policy affects not just LPG but the entire US energy export industry.
April data shows that China has suspended imports of US liquefied natural gas. Bloomberg chart.
The report also stated that due to the US imposing tariffs indiscriminately, attention has been drawn to US LPG, ethane, liquefied natural gas, and crude oil exports to China. China has stopped importing US liquefied natural gas. For LPG and ethane, the US exports a large volume, and China has a high demand for these fuels, so the LPG and ethane markets are expected to be hit the hardest.
In addition, since China retaliated against the US tariff policy and imposed additional tariffs on US LNG imports, foreign media has been closely monitoring energy trade between the US and China. On April 18, the Financial Times of the UK cited shipping data indicating that the time during which China stopped importing US liquefied natural gas kept increasing, and as of then, had exceeded 70 days, continuously setting a record for the longest interval in five years.
"This will have long-term impacts," Sophie Colborn, a natural gas expert at Columbia University's Global Energy Policy Center, said at the time. "I believe Chinese LNG importers will never sign any new US LNG contracts again."
The impact of the US high tariffs on the oil industry is also becoming evident. In May last year, the expansion project of the Trans Mountain Pipeline (TMX) began transporting oil from Alberta Province to the Pacific coast port in British Columbia, and has been in operation for a year. On May 16, Reuters cited data showing that due to Trump's initiation of a global trade war, China has become the largest customer for oil transported via the TMX pipeline.
Data from tanker tracking agency Kpler shows that since the full operation of the expanded TMX pipeline, Canada has been exporting an average of about 207,000 barrels of crude oil per day to China. Over the past decade until 2023, Canada's average daily oil exports to China were only about 7,000 barrels. During the same period, the US delivered approximately 173,000 barrels of oil per day via this pipeline.
Reuters stated that China becoming the largest buyer of oil from the TMX pipeline broke some initial expectations. Some people originally expected these oils to be transported to the US West Coast, making the US the largest buyer, as Asia could obtain cheaper Russian oil.
Skippy York, chief energy strategist at US Turner Mason Energy, said that given China's growing desire to find new and stable crude oil supplies, most of the additional capacity from the TMX pipeline may flow to Asia rather than the US West Coast. He said, "I think you will see almost all newly added oil tankers going westward, exporting to China."
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