Chinese buyers of liquefied natural gas (LNG) are increasingly reselling U.S.-sourced cargoes due to high tariffs imposed by Beijing. As these tariffs drive up import costs, traders and analysts predict this trend will grow, especially as new multi-year supply agreements come into effect and domestic demand experiences a downturn.
In February, China introduced a 15% tariff on U.S. LNG imports. This was followed by further reciprocal tariffs on all U.S. goods set to begin on April 10, matching the 34% tariffs that U.S. President Donald Trump imposed on Chinese imports.
Last month, China, the world’s largest LNG buyer, did not import any U.S. LNG, which accounted for roughly 5% of its LNG imports in the previous year. According to ICIS analyst Alex Siow, the new tariff landscape is forcing Chinese LNG importers to pivot from reselling U.S. LNG to Europe to a broader resell strategy encompassing all U.S. LNG.
Data shows that Chinese companies have already resold 70% of their total LNG resales for 2024 this year alone into Europe. Laura Page of Kpler LNG insight notes that this trend is likely to accelerate as new ventures, such as Venture Global’s Calcasieu Pass project, begin operations, and as market conditions favor U.S. cargoes moving to Europe over Asia.
State-owned firms like Sinopec and CNOOC have contracted significant LNG volumes from U.S. suppliers and are reportedly reselling their cargoes. Various other Chinese traders have been diverting U.S. LNG to European or alternative Asian markets in light of the tariffs, as selling to China has become economically unfeasible.
Additionally, weaker demand in Asia, combined with relatively high prices, has made imports less attractive. February saw China’s LNG imports drop to 4.5 million metric tons, the lowest since April 2022.
Many Chinese buyers are looking for spot prices around $8-9/mmBtu, well below current market prices, indicating a tough environment for importers facing high tariffs.