Chinese buyers of US liquefied natural gas (LNG) are increasingly reselling cargoes to Europe as tariffs imposed by Beijing drive up import costs. The trend is expected to intensify with new multi-year supply deals and weaker domestic demand in China, traders and analysts say. Beijing's 15 per cent tariff on US LNG imports, introduced in February, was followed by a reciprocal levy on all US goods starting April 10. This move matches the US decision to impose a 34 per cent tariff on Chinese imports. Data from Kpler and LSEG show that China, the world's largest LNG importer, imported no US LNG in March, compared to 5 per cent of its total LNG imports from the US in 2024. Analysts expect a significant increase in LNG resales, with Chinese buyers having already resold about 70 per cent of their total 2024 resales in just the first quarter of 2025. This uptick is expected to continue as US exporter Venture Global's Calcasieu Pass LNG project begins operations and the arbitrage to move cargoes from the US to Europe becomes more favorable. Moreover, state-run companies like Sinopec and CNOOC have contracted long-term LNG supplies from US exporters, with Sinopec reselling its April cargoes. Chinese traders, including Sinochem Group and PetroChina, are diverting US LNG to Europe and other Asian markets, where tariffs make sales to China unprofitable. With spot prices in Asia still high at $13.00/mmBtu, Chinese buyers are shifting their focus to European markets, where prices are around $12/mmBtu. China's LNG imports dropped to 4.5 million metric tons in February, the lowest since April 2022. As prices remain high, some buyers are seeking spot imports at $8-9/mmBtu to avoid potential losses. Attribution: Reuters Subediting: M. S. Salama
