HOUSTON – The U.S. cleared the way to resume ethane exports to China on Wednesday, sending letters to producers Enterprise Products Partners and Energy Transfer rescinding a restrictive license requirement put in place just weeks ago, a sign that the U.S.-China trade truce was on track.

The U.S. had placed 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 lifting the 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.

The Commerce Department took a first step toward rescinding the restrictions last week, sending 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.

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.

Ethane Shipments

Ethane shipments to China had halted in June after the license requirement, falling from 257,000 barrels per day in May, ship tracking data from Kpler showed.

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.

At least eight vessels were heading to China on Wednesday, after they had stalled along the U.S. Gulf Coast in June due to the curbs. At least one ship that typically traverses between the United States and China headed to India in June as companies looked for alternative markets.

“Business as usual then,” Vortexa analyst Samantha Hartke said about Wednesday’s letter, adding that she expects July ethane exports to climb back to the seasonal normal of about 240,000 barrels per day.

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(Reporting by Arathy Somasekhar in Houston; Editing by Lisa Shumaker)