First US LNG cargo since 10% tariff enacted arrives in China

SINGAPORE (Reuters) - A liquefied natural gas (LNG) cargo from the United States has arrived in China, the first such cargo since Beijing imposed a tariff on U.S. imports, shipping data from Refinitiv Eikon showed on Monday.

China, the second-biggest importer of LNG globally after Japan, announced in September a 10 percent tariff on U.S. LNG imports as part of an escalating trade war between the world’s two biggest economies.

Since the tariffs were announced, Chinese companies have largely been diverting U.S. shipments to other countries, trade sources said.

This is the first U.S. LNG cargo to be shipped to China since Sept. 10, the Eikon shipping data showed. The cargo was shipped on tanker Ribera Duero Knutsen from the Sabine Pass terminal operated by Cheniere Energy.

“There are too many cargoes from U.S., you can divert maybe 3 or 4 (but not all),” said a trader familiar with the Chinese market.

Total U.S. LNG export capacity is expected to jump to 5.2 billion cubic feet per day (bcfd) by the end of 2018, 8.9 bcfd by the end of 2019 and 10.3 bcfd by the end of 2020, from about 3.8 bcfd now. This would make the United States the world’s third-biggest LNG exporter by capacity in 2019.

“Japan and Korea’s (natural gas) tanks are full,” the trader said. The buyer likely had no choice but to import the cargo into China despite the tariff, he said.

CNOOC did not immediately respond to a query on the matter.

“Diverting is probably not an option because CNOOC has contracts with downstream end-users (in China),” Wen Wang, a senior consultant with Wood Mackenzie’s China gas and LNG team, also said.

China bought 15 percent of all U.S. LNG shipped in 2017, but its U.S. volumes have dropped from the first half of the year.  

Comments

{{ error }}

Add Comment

{{ comment.comment.Name }} Editor • {{ comment.timeAgo }}

{{ comment.comment.Text }}

• Most Read
• Most Commented