U.S.-China Trade Disputes Impact Propane Export Markets and Expansion

The global propane market continues to be influenced by international trade dynamics and evolving tariff policies, with the U.S.-China trade relationship at the forefront. Recent developments have shown the effects of these policies on exports and imports, highlighting the complexities and uncertainties businesses face.

The Trump administration's tariff policies have sparked considerable debate, focusing largely on U.S. imports. However, several nations have retaliated by imposing tariffs on American goods, creating a tit-for-tat trade environment. A notable example is the trade tensions between the U.S. and China, where both countries imposed heavy tariffs, peaking at 145 percent and 125 percent, respectively. This clash temporarily eased after a mid-May agreement, but legal battles continue to influence tariff statuses.

Observers are closely monitoring how these tariffs might affect U.S. propane exports to China, a significant consumer of U.S. propane. In 2018, China's retaliatory tariffs led to a decrease in its propane imports from the U.S., with Iran, Qatar, and the UAE stepping in to fill the gap, according to the U.S. Energy Information Administration (EIA).

China's role as a major destination for American propane is significant, especially for its use in propane dehydrogenation facilities for plastic production. In 2024, 32 percent of China’s propane imports came from the United States, overshadowing imports from Iran, Qatar, and the UAE. This strong trade link between the U.S. and China in the propane sector is particularly sensitive under current administrative policies.

The importance of U.S. propane exports to global markets cannot be overstated. Since hydraulic fracturing advancements around 2007, the U.S. has seen a remarkable increase in propane exports, transitioning from a net importer to the world's largest producer and exporter. In 2024, the U.S. averaged a record 1.8 million barrels per day in propane exports, according to the EIA.

Mark Rachal of Cost Management Solutions highlights expectations for increased export capacity, projected to rise from 1.8 million to 2.4 million barrels per day. This expansion raises questions about the impact of tariff policies on long-term infrastructure investments.

Key projects in the pipeline include:

• Energy Transfer's imminent expansion at Nederland Terminal, set to add 250,000 bpd of NGL export capacity.
• Enterprise Products Partners' expansion along the Houston Ship Channel, enhancing propane and butane export capabilities by 300,000 bpd by the end of 2026, with additional capacity at the Neches River Terminal.
• Range Resources' upcoming 20,000 bpd NGL export capacity on the East Coast, expected in 2026.
• Targa Resources' expansion at the Galena Park Marine Terminal, aiming for 19 million barrels per month by Q3 2027.
• A joint venture by ONEOK Inc. and MPLX LP to build a 400,000-bpd LP gas export terminal and pipeline in Texas, slated for early 2028 completion.

The unpredictability of U.S. tariff policy presents challenges for these ambitious expansion plans, yet the momentum in U.S. propane exports suggests resilience against potential trade disruptions.

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