By Chen Aizhu, Emily Chow and Marwa Rashad
SINGAPORE/LONDON (Reuters) – Chinese buyers of LNG are re-selling U.S.-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% tariffs on U.S. LNG imports in early February, on Friday slapped reciprocal levies on all U.S. goods beginning April 10, matching U.S. President Donald Trump’s move to put 34% additional tariffs on Chinese goods.
China, the world’s largest buyer of liquefied natural gas, imported no U.S. LNG during March, data from Kpler and LSEG show. The U.S. accounted for about 5% 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 U.S. LNG into Europe’ to ‘We must re-sell all U.S. LNG’ due to the major difference in tariffs to be paid,” said ICIS analyst Alex Siow.
Already this year, Chinese offtakers of U.S. LNG have resold into Europe about 70% of what they resold in all of 2024, said Laura Page, head of Kpler LNG insight.
A big uptick in resales is expected after U.S. exporter Venture Global’s Calcasieu Pass LNG project begins commercial operations, and as the arbitrage to move cargoes from one market to another favours 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 U.S.-sourced LNG cargoes, ICIS’ Siow said.
Four Chinese traders said buyers of U.S. 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% 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 U.S. and current prices made the arbitrage more favourable, 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.
(Reporting by Chen Aizhu and Emily Chow in Singapore, Marwa Rashad in London; Additional reporting by Robert Harvey in London and Curtis Williams in Houston; Editing by Tony Munroe and Sonali Paul)
