[LongDrives]

Chinese Automotive Juggernaut at risk!!

There is a huge issue that may throw a spanner in the wheel of the Chinese Industrial Juggernaut that are a vital for continued manufacturing sector especially Automotive and allied sector.

ETHANE & PROPANE

This petrochemical product is vital for Industry to thrive as plastics are made from Ethane. The Ethelene is produced by cracking Ethane and this product allows 80% Ethelene that is economical in making plastic that is used in almost all the Industries that includes toy manufacturing, medical devices, cutleryware among all. Automotive industry heavily relies on plastics as most of the engine components and Interiors is made of plastics. Ant that is about to get expensive in China.

Reason?

80% of global Ethane production is originated from the US and China gets 80% of it from US. 1.9 billion tons of Ethane that is 5 lakh barrels Ethane is exported from USA and 35% of it from US goes to China. Norway is the second largest at just 3000 barrels a day that goes to European countries. China just produces 2400 barrels a day.




Alternatively Ethelene can also be produced by cracking Naphta but that yields just 30% Ethelene that is expensive. Also Chinese factories especially Satellite Petrochem refines exclusive US Propane and also built few carriers to transport Ethane that needs storage at minus 53 degrees storage. Now with 125% import tarrifs, China is stuck between devil and deep sea. That puts China at risk of halting the entire manufacturing industry. Also current stockpile will end by mid May and if not resumed will crash the Industries.



Propane is the third highest imported product from US and China imports 60% of it from US. Plastic is Polypropylene made from the process of Propane Dehydrogenation PDH from Propane. That is another vital component that may hit China hard.

Automotive sector is at a huge risk and Chinese cars will turn out very expensive if Chinese government does not exempt some products from 125% tarrif on retaliatory US imports and Ethane and Propane are some of them. The price of Ethane has skyrocketed to $350 from $150 and Propane from $300 to $600 collapsing the entire Chinese Industrial production. The Chinese automotive industry is know for Cheap manufacturing and undercutting European and American makers in pricing their cars including EVs. Now that is at a huge risk not only at pricing but also production and supply of plastic raw materials is halted.

There is a news in Circulation within China that the government may exempt tarrifs on many products to keep it's industry from collapsing that includes Petrochem products, Semiconductors and Medical devices from import tarrifs. Also Chinese government denies talks with US on tarrifs but Trump and US government have confirmed that Chinese government authorities have begun negotiations with USA.

All this news is from a China-bashing YouTube channel China Observer that specializing in criticising China. Don't know how to take the news. With full ears or a pinch of salt!

https://youtu.be/inE6JiDBF2Q?si=n7408pZSZq7rUquK

[LongDrives]

Originally Posted by LongDrives

Chinese Automotive Juggernaut at risk!!

There is a news in Circulation within China that the government may exempt tarrifs on many products to keep it's industry from collapsing that includes Petrochem products, Semiconductors and Medical devices from import tarrifs.

Exclusive: China waives tariffs on US ethane imports, sources say

China has waived the 125% tariff on ethane imports from the United States imposed earlier this month, two sources with knowledge of the matter said on Tuesday, among a group of products that have been granted exemptions.

The move will ease pressure on Chinese firms that import U.S. ethane for petrochemical production as well as provide an outlet for the natural gas liquid, a byproduct of U.S. shale gas production.

This news is still unconfirmed and has not been officially announced but it may go unannounced but implemented secretly.

Reuters - China waives tariffs US ethane imports sources say