A directive from the US Commerce Department’s Bureau of Industry and Security (BIS) now requires Validated End‑User (VEU) licences for ethane exports to China, raising significant uncertainty for very‑large ethane carriers (VLECs) and the global ethane market.
The revocation of previously granted licences by BIS has already disrupted vessel scheduling and berthing at Gulf Coast terminals.
Two VLECs—Pacific INEOS Grenadier and STL Qianjiang—remain at Gulf Coast terminals, unable to load or sail.
STL Qianjiang, bound for Satellite Chemical, has been anchored at Nederland since 26 May, while Wanhua Chemical’s Gas Changjiang may face rerouting.
In addition, exporters such as Enterprise Products Partners and Energy Transfer received "notices of intent to deny" emergency licence applications, prompting them to reassess laycan schedules.
Over half a dozen US‑loaded ethane vessels are stalled off the Gulf Coast, causing terminal congestion and delays at Nederland and Morgan’s Point, with turnaround times prolonged by clustering and cargo diversions.
The impact is intensified by China’s share of over 55% of global US seaborne ethane liftings in 2024, creating limited alternative markets.
Though Europe, India, and Southeast Asia exist as outlets, only India has compatible VLEC berths, supporting approximately four VLEC discharges per month, insufficient to absorb full volumes.
This licensing requirement follows China’s earlier decision to exempt US ethane from a 125% retaliatory tariff due to strategic feedstock needs.
While the directive may produce short‑term supply chain disruptions, the long‑term consequences include delayed infrastructure development.
In China, licence delays could lower cracker utilisation rates, postpone new steam‑cracker startups, and stall sector growth. In the US, delayed commissioning of export terminals—including the 3.7 mtpa Neches River Phase 1 (2025), 1.4 mtpa Marcus Hook and 5.1 mtpa Nederland Flexport expansions (2026)—will restrict export capacity and reduce terminal usage.
The VLEC fleet, currently comprising 30 ships with 58 more VLECs and eight ULECs on order, may also see reduced newbuild contracting, as shipowners delay decisions amid market uncertainty.
Although disruptions are likely to be temporary, ripple effects across both China’s and the US’s ethane infrastructure and maritime trade could constrain long‑term ethane flows.
Enterprise Products Partners L.P. is a leading US midstream energy company, operating pipelines, storage, fractionation, and marine export terminals. Its Houston Ship Channel terminal loaded approximately 213,000 bpd of ethane in 2024, with around 40% bound for China, and the Morgan’s Point facility shipped about 85,000 bpd to the same market.
Pacific INEOS Grenadier is a Very Large Ethane Carrier (VLEC) used to transport ethane from US Gulf Coast terminals to China. It is currently stalled at a Gulf Coast terminal due to the new licensing mandate.
Satellite Chemical is a Chinese petrochemical firm that imports US ethane via VLECs such as STL Qianjiang. It is facing uncertainty due to vessel delays and export licensing issues.
Wanhua Chemical is a Chinese chemical manufacturer. Its VLEC, Gas Changjiang, may be rerouted as its export licence approval remains pending.