Why Is China Turning to the Mideast for LPG?

The U.S.-China trade war has reshaped global energy flows, and nowhere is this more evident than in China’s sudden pivot to Middle Eastern liquefied petroleum gas (LPG). Once reliant on U.S. supplies, China is now redirecting billions of dollars toward Mideast producers like Saudi Aramco, driven by tariffs, cost pressures, and the urgent need to fuel its petrochemical industry. This shift is not just a short-term adjustment—it reflects deeper strategic shifts with lasting implications for investors.

The Trade War’s Impact on LPG Flows

In 2024, China imported a record 17.3 million tons of U.S. propane, accounting for 60% of its total LPG imports. U.S. ethane, critical for China’s propane dehydrogenation (PDH) plants, also flowed freely. But by 2025, retaliatory tariffs—15% on U.S. LPG and broader trade penalties—turned this dynamic upside down. Analysts now project China’s LPG imports from the U.S. will drop by 150,000 barrels per day (bpd) in late 2025 compared to 2024 levels.

This collapse mirrors the 2018–2019 trade war, when China halted U.S. crude and LNG imports. The lesson? Geopolitical tensions can upend energy markets overnight.

The Middle East Steps In

As U.S. supplies retreated, Middle Eastern producers filled the gap. By mid-2025, Middle East LPG premiums in China surged to $30–$60 per ton—a 50% increase from pre-trade-war levels—reflecting tight supply and rising demand. Saudi Aramco and others ramped up shipments, while seven VLGCs originally destined for China were rerouted to India and Southeast Asia in May–June 2025, underscoring the scramble for scarce supplies.

The shift wasn’t just about tariffs. Middle Eastern suppliers offered flexible contracts and cost competitiveness despite higher premiums. Unlike U.S. cargoes, which could be easily swapped by Japanese and South Korean buyers, Middle Eastern supplies became a necessity for China’s PDH plants. Meanwhile, displaced U.S. LPG flooded markets in Japan and Europe, pushing prices lower and hurting U.S. shale producers.

PDH Expansion: The Driving Force

China’s PDH capacity—used to convert propane into propylene for plastics—has exploded, growing from 6.6 million metric tons per annum (mtpa) in 2019 to 22.6 mtpa by September 2024. This surge created a ravenous appetite for LPG, with U.S. ethane feeding into this boom. But tariffs and supply disruptions have now forced Chinese firms to pay more for Middle Eastern propane, squeezing margins. PDH plants faced negative margins since April 啐2023, and the shift to costlier LPG could further delay planned capacity expansions.

The Ripple Effects

The realignment is a win for Middle Eastern producers, who now command higher premiums and market share. For U.S. suppliers, it’s a double blow: reduced demand and lower prices. Japan and India, meanwhile, are snapping up discounted U.S. LPG. In April 2025, Japanese imports of U.S. LPG hit 274,000 bpd, nearly double earlier levels, while Indian refiners secured U.S. supplies at discounts against Saudi CP prices.

Conclusion: A New Energy Order

China’s turn to the Mideast for LPG is a stark reminder of how trade wars reshape global supply chains. While tariffs forced the shift, they also exposed vulnerabilities in China’s energy security and petrochemical sector. Middle Eastern suppliers now hold greater leverage, but Chinese PDH firms face margin pressures that could slow future investments. Meanwhile, U.S. producers grapple with oversupply and price erosion—a cautionary tale for energy investors betting on geopolitical stability.

The data is clear: China’s LPG imports from the U.S. fell from 17.3 million tons in 2024 to a projected 50% drop by late 2025, while Middle East premiums rose by 50%. This isn’t just a trade dispute—it’s a structural shift toward a multipolar energy market, where geopolitical calculus and petrochemical demand will dictate winners and losers for years to come.