Chinese importers of liquefied natural gas (LNG) are increasingly reselling U.S.-sourced cargoes to Europe and other markets as retaliatory tariffs between the U.S. and China drive up import costs. This trend is expected to intensify as new long-term supply contracts come into effect this month and domestic demand in China weakens, according to traders and analysts.
In February, Beijing imposed a 15% tariff on U.S. LNG imports, and on Friday, it extended reciprocal tariffs on all U.S. goods, beginning April 10. These actions mirror U.S. President Donald Trump’s decision to impose additional tariffs of 34% on Chinese goods.
China, the world’s largest importer of LNG, imported no U.S. LNG in March, according to data from Kpler and LSEG. Last year, U.S. LNG accounted for approximately 5% of China’s total LNG imports, Chinese customs data revealed.
Resale Trend Accelerates
Analysts suggest that Chinese LNG importers are likely to shift their strategy from attempting to resell U.S. LNG into Europe to focusing on reselling all U.S. LNG cargoes due to the growing disparity in tariffs. Alex Siow, an analyst at ICIS, noted that this change is driven by the significant difference in tariffs now being applied.
So far this year, Chinese buyers have already resold about 70% of the U.S. LNG they resold in 2024, according to Laura Page, head of Kpler LNG insight. As U.S. LNG exporter Venture Global’s Calcasieu Pass project begins operations, analysts expect a significant increase in resales, particularly as the price arbitrage between European and Asian markets becomes more favorable this summer.
New Contracts and Diversions
China’s state-run Sinopec has contracted to purchase 1 million metric tons of LNG annually from Venture Global, starting this month, sources confirmed. Sinopec has already resold its April cargoes. Another state firm, CNOOC, is set to begin a five-year contract for 0.5 million tons annually from Venture Global, with resales expected.
In addition to Sinopec and CNOOC, other Chinese companies like Sinochem Group, Foran Energy Group, and PetroChina have been diverting their U.S.-sourced LNG cargoes, according to Siow. Four Chinese traders reported that U.S. LNG buyers are increasingly placing their cargoes in Europe or other Asian markets, as the additional tariffs make sales to China financially unviable.
One trader from a state-owned firm noted that imports of U.S. LNG stopped after the initial 15% retaliatory tariff was imposed. The trader added that the new tariffs would make imports even less attractive, and that most of their supplies were redirected to Europe due to favorable price arbitrage.
Weak Domestic Demand and High Prices
Chinese buyers are facing weak spot demand, with Asian LNG prices still relatively high. As of April 4, prices in Asia were $13.00 per million British thermal units (mmBtu), while European prices were estimated at around $12/mmBtu.
China imported 4.5 million metric tons of LNG in February, the lowest monthly volume since April 2022, according to customs data. A second Chinese LNG trader stated that any delivery price above the low $10’s per mmBtu is considered unsustainable, as it likely leads to financial losses.
For China’s tier-two LNG buyers, including city-gas distributors, the target price for spot imports is around $8-9/mmBtu, another trader reported. This price discrepancy underscores the growing pressure on Chinese importers facing high tariffs and weak domestic demand.
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