China’s LPG market has been on a rollercoaster ride this year, caught between tariff wars, volatile petchem margins and shifting supply patterns. Following the lows in June, the country’s LPG imports began to recover in July owing to robust feedstock demand from PDH plants and temporarily eased geopolitical headwinds, after the second 90-day pause of US–China tariffs in August.
LPG shipping rates reflected the shift, with vessel availability tightening and freight rates rising on US–Japan and AG–Japan routes. However, even with the upsides, concerns remain over the sustainability of the rebound, with petchem margins still under pressure and tariff uncertainty still continuing.
From collapse to recovery
The US–China tit-for-tat tariffs in April created tensions in China’s petchem sector, as more than half the country’s LPG imports come from the US. The announcement triggered a reduction in petchem operating rates and shutdowns at North China crackers reliant on US-origin cargoes, while steam crackers shifted to naphtha.
Chinese buyers moved to secure alternative supplies from the Middle East and Canada but the associated premiums exacerbated negative margins, especially for smaller and less-efficient crackers. Consequently, China’s imports from the US dropped, while the premiums hampered demand from the petchem sector. Additionally, Middle Eastern cargoes with even propane-butane splits are misaligned with China’s propane-heavy demand.
As a result, China’s overall imports plunged in June, with US LPG’s share of China’s imports crashing to 12% (from 59% in February 2025), reflecting reduced fixtures post-April. However, a 90-day tariff pause (with China’s retaliatory tariff on US LPG falling from 125% to 10%) prompted a cautious recovery in China’s LPG imports, with the US share rising to 17% in July. The tariff pause failed to alleviate fears among the buyers, but the second 90-day extension is expected to incentivise Chinese buyers to move towards US LPG again.
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Source: Drewry
