ICIS - chemical podcasts Episode 1340: Podcast: Tariff Relief and Its Impact on the China LPG Market
May 16, 2025
China has cut its tariff on U.S. LPG from 125% to 10% for 90 days, sparking a significant shift in trade dynamics. This relief may allow more U.S. cargoes into the market, potentially affecting pricing and Chinese petrochemical operations. However, market participants remain hesitant, signaling cautious optimism. As run rates for propylene derivatives hint at recovery, discussions also highlight trends in domestic production and adaptive strategies among local producers amid these tariff changes.
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Tariff Cut Reopens US LPG Flows
- China has cut its US LPG tariff from 125% to 10% for 90 days, reopening US LPG cargo flows to China.
- This tariff cut is expected to rebalance prices and potentially ease Chinese propane prices short-term.
PDH Run Rate Recovery Expected
- PDH run rates in China are expected to recover above 60%, possibly near 70% in June and July due to tariff relief.
- However, rates remain below pre-tariff projections due to product supply mismatch and economic pressures.
Cautious Trading Despite Relief
- Market participants remain cautious despite tariff relief, showing limited bidding for US cargoes.
- Chinese PDH operators aim for processing trade models to adapt sustainably to changing policies and excess downstream supply.