US gas exports to China stopped after Beijing imposed tariffs

Beijing: China has stopped buying liquefied natural gas from the United States after imposing a 15 per cent tariff on these shipments on February 10, ship tracking data shows, in the latest sign that Beijing continues to decouple from the US economy.

China's imports of LNG from the United States had already slumped to low levels from November through January, data from China's customs agency shows. China instead expanded its purchases from Russia, which supplied China with four times as much LNG last year as the United States did.

Only two cargo ships of LNG from the United States were headed to China when Beijing imposed tariffs on American fossil fuels in retaliation for President Donald Trump's initial round of 10 per cent tariffs on Chinese goods. One ship reached China before the tariffs took effect and unloaded its cargo while the other went to Bangladesh to avoid the tariff, according to Kpler, a Belgian energy data company.

Europe's boycott of natural gas from Russia following its invasion of Ukraine in 2022 has meant that Russian gas sells for very little, while European companies have paid considerably more for gas from elsewhere, including the United States. So Chinese electric utilities have been able to buy a lot of gas at low cost from Russia instead of the United States.

Chinese energy firms have been big buyers of LNG in the United States, but were bringing fairly little of that fuel to China even before the tariff took effect. Instead, Chinese companies have been sending their purchases from American ports to sell to Europe.

China's tariffs "are not really affecting the trade flows," said Gillian Boccara, director of the LNG team at Kpler. With energy prices so high for American gas that goes to Europe, she said, "it doesn't really make sense to go all the way to Asia."

Tariffs may not have much effect on where American gas is shipped, but they could still hurt the American industry, Boccara said. Trump's tariffs on imported steel are making it more costly to build LNG loading facilities. And broader U.S. tariffs could dampen the global pace of economic growth, which could depress demand for gas.

Shipments of LNG from the United States to China soared after the signing in January 2020 of a trade agreement between Beijing and Washington. The agreement included a Chinese promise to step up purchases of American gas, but not necessarily for use in China.

LNG shipments from the United States to China rose to 9.3 million tons in 2021 from 268,000 tons in 2019. They then plummeted in 2022 as gas was sent to Europe at high prices following a decision there not to buy inexpensive Russian gas.

The United States accounted for 3% of China's natural gas imports last year, according to data from China's customs administration.

Chinese energy firms became big players in global markets for liquefied natural gas about six months before the Russian invasion, according to an analysis in 2023 by energy analysts at Rice University's Institute for Public Policy in Houston. Nearly a dozen Chinese companies accounted for 91% of worldwide purchases of LNG on long-term contracts.

Chinese companies "virtually monopolized global LNG procurement" in the final months of 2021, the Rice University experts concluded.

Those cargos, as well as many more that Chinese companies purchased in the two months following the invasion, were then sent to Europe for a quick profit.