- Due to increased tariffs and weakened domestic demand, Chinese buyers are significantly growing their resales of U.S. LNG to Europe.
- U.S. LNG resales to Europe have surged, with Chinese firms like Sinopec and CNOOC diverting cargoes to markets where tariffs are less impactful, as high Asian prices make imports less viable.
Chinese LNG buyers are actively reselling U.S.-sourced cargoes as tariffs increase import costs. According to traders and analysts, this trend is expected to accelerate as new multi-year supply deals begin this month amid weakening domestic demand.
Beijing imposed 15% tariffs on U.S. LNG imports in early February. It recently announced additional reciprocal levies on all U.S. goods starting April 10, matching U.S. President Donald Trump‘s 34% additional tariffs on Chinese goods.
China, the world’s largest LNG buyer, imported no U.S. LNG during March, according to data from Kpler and LSEG. Chinese customs data shows that U.S. supplies accounted for approximately 5% of China’s LNG last year.
“Chinese LNG importers will probably shift from thinking: ‘We should attempt to resell U.S. LNG into Europe’ to ‘We must resell all U.S. LNG’ due to the major difference in tariffs to be paid,” said ICIS analyst Alex Siow.
Already, Chinese buyers have resold about 70% of what they resold to Europe throughout 2024. More resales will occur after Venture Global’s Calcasieu Pass LNG project begins operations. Currently, price differences favour Europe over Asia for cargo destinations.
State-run Sinopec has contracted to buy 1 million metric tons of LNG annually from Venture Global starting this month. Consequently, Sinopec has already resold its April cargoes. Similarly, in April, CNOOC will begin a five-year contract for annual supplies of 0.5 million tons.
Chinese importers Sinochem Group, Foran Energy Group, and PetroChina now divert their U.S.-sourced LNG cargoes to other markets. “Imports stopped after the earlier 15% tax kicked in,” reports a state-owned firm trader. “The new tariffs make imports even less attractive.” Therefore, most supplies go to Europe due to proximity and better prices.
Additionally, Chinese buyers face weak domestic demand. Asian prices remain high at $13.00/mmBtu, while European prices hover around $12/mmBtu.
As a result, China’s February LNG imports dropped to 4.5 million metric tons, the lowest since April 2022. One trader notes, “Any delivery price above the low $10’s per mmBtu likely causes losses.”
Finally, smaller Chinese LNG buyers now seek much lower prices, looking to pay only $8-9/mmBtu for spot imports.