US Propane Tanker Diverts Chinese Port Call In Latest Warning Sign For China’s Plastic Factories

To begin the week, we highlighted a potential breaking point emerging in the global economy due to the escalating tariff war: Chinese plastics manufacturers—heavily reliant on U.S. petrochemicals—now face production halts as shipments are increasingly being diverted from the world’s second-largest economy. 

Bloomberg cites new ship-tracking data showing that a very large gas carrier hauling U.S. propane has diverted from its initial destination in China to a new port of call in Japan. 

The data showed that BW Gemini is hauling 46,000 tons of propane from the U.S. The gas tanker left Phillips 66 Freeport LPG Export Terminal in late March and was initially headed for Yantai, China. However, in recent days, while traversing the Pacific Ocean, the port of call was changed to Imari, Japan. 

There was no explanation for BW Gemini’s sudden port calling switch from China to Japan, but in recent weeks, Beijing slapped 125% tariffs on all liquefied petroleum gas. 

The tanker laden with U.S. propane brings the conversation full circle to our note on Monday (read: here), which warned that the global plastics industry could soon be thrown into turmoil:

Chinese plastics factories that depend on a gas they mainly import from the U.S. are contending with the prospect of widespread shutdowns as the world’s two largest economies bunker down for a prolonged trade war

The note titled “Chinese Plastics Factories Face Mass Closure As US Ethane Supply Evaporates” focused on ethane, a petrochemical feedstock to produce ethylene, one of the most critical building blocks in modern manufacturing. 

Ethylene is the foundation for a wide range of downstream products, including:

Polyethylene (PE):

• Low-Density Polyethylene (LDPE): Plastic bags, films, food wraps

• High-Density Polyethylene (HDPE): Bottles, containers, pipes

• Ethylene Vinyl Acetate (EVA): Shoe soles, foam products, adhesives

Industrial Chemicals:

• Ethylene oxide: Used to produce ethylene glycol, the base for antifreeze and polyester

• Styrene: For polystyrene plastics (packaging, insulation)

• Vinyl chloride (via EDC): Used to make PVC for pipes, window frames, cables

• Alpha-olefins: For synthetic lubricants and specialty polymers

Polyethylene is indeed one of the core inputs of the modern plastic economy. However, the deepening trade war is disrupting petrochemical shipments to China. If these disruptions persist over a prolonged period, China could face manufacturing slowdowns, potentially triggering ripple effects across the global economy. The IMF already issued this warning earlier…