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China’s appetite for key raw materials used in plastic production is expected to decline, driven by rising costs stemming from escalating trade tensions with the United States, Bloomberg reported.
The introduction of import tariffs is set to push up the cost of natural gas liquids (NGLs) – a key by-product of gas extraction – delivering yet another setback to China’s vast petrochemical industry, which is already grappling with oversupply due to sluggish domestic demand. The move also threatens to undermine Beijing’s push for refineries to shift towards petrochemical output as a way to compensate for declining fuel consumption.
China’s consumption of NGLs such as liquefied petroleum gas, naphtha, and ethane could decline by up to 400,000 barrels per day almost overnight, warns the consultancy FGE. With total demand forecast at around 6.2 to 6.3 million barrels a day this year, the drop would mark a significant hit. Analyst Mia Geng notes that the sector’s heavy dependence on US imports – now burdened by steep tariffs – has created one of the most serious challenges the industry has faced in recent years.
China’s steep 84% tariff on US goods, including liquefied petroleum gas (LPG), has already disrupted market stability, triggering sharp price hikes for alternative supplies from the Middle East. In 2024, the US accounted for roughly 60% of China’s LPG imports, customs data shows – a reliance that has left the market exposed to sudden cost surges as trade tensions escalate.
‘Although we expect some imported LPG volumes to be substituted with Middle Eastern propane, it is unlikely that these can fully cover China’s hulking import demand’, analyst Koen Wessels of Energy Aspects noted in a report dated 10 April.