By Arathy Somasekhar and Karen Freifeld
HOUSTON (Reuters) -The U.S. has cleared the way for Enterprise Products Partners to resume ethane shipments to China, the company said on Wednesday, revoking a restrictive license requirement that was put in place just weeks ago as the U.S.-China trade war turned from tariffs to supply chains.
The U.S. had placed new restrictions on ethane — and a wide swathe of other exports — to China in late May and early June after accusing Beijing of slowing shipments of rare earths vital to automakers and other industries.
Wednesday’s letter revoking the previous license requirement comes after the United States and China resolved issues last week surrounding shipments of rare earth minerals and magnets to the U.S.
Last week, the Commerce Department sent letters to Enterprise Products, Energy Transfer, as well as ethane traders Satellite Chemical USA and Vinmar International, informing the companies they could load ethane on vessels destined for China but could not unload the ethane in China without authorization.
Energy Transfer, Vinmar and Satellite did not immediately respond to requests for comment. The U.S. Department of Commerce and the White House also did not immediately respond to requests for comment.
About half of all U.S. exports of ethane, which is extracted from U.S. shale gas and primarily used as a petrochemical feedstock, head to China, and a halt in shipments was set to hurt U.S. producers as well as Chinese petrochemical manufacturers.
Chinese petrochemical firms use ethane as a feedstock because it is cheaper than naphtha. U.S. oil and gas producers need China to buy their natural gas liquids as domestic supply exceeds demand.
(Reporting by Arathy Somasekhar in Houston; Editing by Lisa Shumaker)
