The silent feedstock war: Ethane could be China’s achilles heel

While Western media keeps clapping at the rare earths theatre like it’s the main act, they’re missing the darker subplot unravelling backstage — and this one’s written in hydrocarbons, not lanthanides.

China may control the spice that oils the tech world — rare earths — but America pipes something just as vital: ethane and propane. And in this great decoupling drama, US petrochemical producers just found themselves cast as reluctant protagonists in Act II of the trade war.

In 2024, China inhaled over 565,000 barrels per day of petrochemical feedstocks from the U.S., worth a cool $4.7 billion. That’s not pocket change — that’s artillery. Compare that to the $170 million the U.S. spent importing rare earths — 70% of which came from China — and you start to see where the leverage really lies.

But here’s where the script flips: while China dominates rare earth exports, it’s addicted to American feedstock. Its vast plastics empire — powering the world's supply chains with electronics, textiles, and packaging — needs that chemical juice. And not just any juice. Some plants run fine on flexible naphtha, sure. But those high-capacity propane dehydrogenation (PDH) facilities? They can’t just switch lanes mid-race. They need propane. And guess who’s been the pusher? Uncle Sam.

Half of China’s propane imports last year came from the US. That symbiosis was humming — until April, when President Trump lobbed tariff grenades across the Pacific. China fired back with a 125% duty on US feedstocks like ethane and propane, effectively torching the import economics and leaving PDH operators — already bleeding from wafer-thin margins — choking on fumes.

There are few escape routes. Middle Eastern suppliers are busy feeding India, Korea, and Japan. Some barrels might get rerouted, but at a premium — if they show up at all. China’s Hengli Petrochemical and peers now face the unenviable choice: pay up, or power down.

Then came the fake truce. Beijing, realizing it had aimed at its own foot, quietly dropped tariffs on US ethane as trade talks resumed. But Washington wasn’t in the mood to forgive and forget. This week, the Commerce Department blocked Enterprise Products Partners and Energy Transfer from exporting ethane to China, citing national security concerns and potential “military end use.” That’s not a policy tweak — it’s a red light at the end of a chemical pipeline.

Now China’s ethane cracking plants — like those in Lianyungang and Tianjin — are suddenly looking at dry feedstock taps. SP Chemicals, which leans heavily on U.S. supply, could be staring at inventory cliffs. Even if China wanted to buy, America’s locking the gates.

This isn’t just a messy divorce. It’s a commodity custody battle — and hydrocarbons may be the first kids to suffer. Rare earths may steal the headlines, but ethane and propane are becoming the real choke points. If the West wants to lean into decoupling, it just found its pressure valve.

The decoupling won’t be clean. But it won’t be equal either. This isn’t a tech war. It’s a feedstock fight — and for once, the U.S. is holding the blowtorch.