U.S. ethane production and exports are set to benefit from petrochemical firms in Asia shifting feedstock from naphtha to the cheaper ethane as chemicals margins shrink.
Ethane, a natural gas liquid primarily extracted from raw natural gas during processing, is mainly used as a feedstock for ethylene production, one of the most important building blocks in the petrochemical industry.
Some petrochemical producers in Asia, including in South Korea, Thailand, and China, have been looking to boost the use of ethane, especially such sourced from the United States, due to the fact that it’s cheaper than naphtha.
Thailand’s PTT Global Chemical Public Company Limited (GC) also wants to boost its ethane imports from America to reduce Thailand’s trade surplus and potentially avoid steep U.S. tariffs for Thai goods once the tariff pause expires in July.
In March, PTT Global Chemical said it would integrate U.S.-imported ethane into its operations in Thailand as an alternative feedstock.
“This initiative also strengthens trade and economic collaboration between Thailand and the U.S., contributing to a more balanced trade relationship and further enhancing global partnerships in the petrochemical sector,” CEO Narongsak Jivakanun commented.
Under a deal with Enterprise Products Partners L.P., the Thai firm will secure a supply of 400,000 tons of ethane annually.
U.S. ethane production, consumption, and exports reached record highs in 2024, the Energy Information Administration (EIA) said in March.
In the May Short-Term Energy Outlook, the EIA noted that China waived in late April a retaliatory 125% tariff on imports of U.S. ethane that had been levied earlier in the month.
With that tariff no longer in place, the EIA continues to expect strong growth in U.S. ethane production and exports, with production of 2.9 million b/d of ethane this year and 3.1 million b/d next year, up from the record 2.8 million b/d in 2024. Most of this growth in ethane production will be exported to supply growing international demand.
New petrochemicals crackers in Europe and Asia – such as Ineos’s Project One ethylene cracker in Antwerp, Belgium, and Wanhua Chemical’s flex-feed cracker in China – will also use ethane, further expanding the global market for U.S. ethane, the EIA said in the latest STEO.
By Charles Kennedy for Oilprice.com
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