BY CHEN AIZHU, EMILY CHOW AND MARWA RASHAD
SINGAPORE/LONDON – Chinese buyers of LNG are re-selling US-sourced cargoes as tit-for-tat tariffs drive up import costs, and the trend is set to accelerate as new multi-year supply deals kick in this month and domestic demand weakens, traders and analysts say.
Beijing, which imposed 15 percent tariffs on US LNG imports in early February, on Friday slapped reciprocal levies on all US goods beginning April 10, matching US President Donald Trump’s move to put 34 percent additional tariffs on Chinese goods.
China, the world’s largest buyer of liquefied natural gas, imported no US LNG during March, data from Kpler and LSEG show. The US accounted for about 5 percent of China’s LNG last year, according to Chinese customs data.
“Chinese LNG importers will probably shift from thinking: ‘We should attempt to re-sell US LNG into Europe’ to ‘We must re-sell all US LNG’ due to the major difference in tariffs to be paid,” said ICIS analyst Alex Siow.
Already this year, Chinese offtakers of US LNG have resold into Europe about 70 percent of what they resold in all of 2024, said Laura Page, head of Kpler LNG insight.
A big uptick in resales is expected after US exporter Venture Global’s Calcasieu Pass LNG project begins commercial operations, and as the arbitrage to move cargoes from one market to another favors Europe over Asia this summer, she added.
China’s state-run Sinopec has contracted to buy 1 million metric tons of LNG annually from Venture Global starting this month, according to two industry sources. Sinopec has resold its April cargoes, one of them said.
CNOOC, another state firm, is also set to begin a five-year contract in April for annual supplies of 0.5 million tons from Venture Global, sources added.
CNOOC, Sinopec and Venture Global did not immediately respond to requests for comment.
Chinese importers Sinochem Group, Foran Energy Group and state giant PetroChina have been diverting their US-sourced LNG cargoes, ICIS’ Siow said.
Four Chinese traders said buyers of US LNG have been placing their cargoes in Europe or other Asian markets, as Beijing’s additional tariffs make sales to China unviable.
“Imports stopped after the earlier 15 percent retaliatory tax kicked in,” said a trader with a state-owned firm, adding that the new tariffs will make imports even less attractive.
The trader said most of their FOB-based supplies went to Europe, as those markets were closer to the US and current prices made the arbitrage more favorable, referring to the free-on-board contract term that allows buyers to resell cargoes.
Chinese buyers facing hefty tariffs are also seeing weak spot demand, as Asian prices, at $13.00/mmBtu on April 4, remain relatively high. Delivered LNG prices to Europe on Friday were estimated at around $12/mmBtu.
China imported 4.5 million metric tons of LNG in February, customs data showed, the lowest monthly level since April 2022.
“Any delivery price above the low $10’s per million British thermal units (mmBtu) are considered unsafe – meaning likely loss-making,” said a second Chinese LNG trader.
China’s tier-two LNG buyers, mostly city-gas distributors, were looking to pay $8-9/mmBtu for spot price imports, another trader said. – Reuters
