China is the world's top energy importer but its purchases from the United States are relatively modest, lessening the impact of Beijing's move Tuesday to impose retaliatory tariffs on U.S. crude oil, liquefied natural gas (LNG) and coal.
Shortly after U.S. President Donald Trump's tariffs on China took effect Tuesday, China's Finance Ministry said it would impose levies of 15% on U.S. coal and LNG imports and 10% on crude oil as well as farm equipment and some cars, starting Feb. 10.
China's U.S. crude oil imports fell 52% to about 230,540 barrels per day (bpd) in the first 11 months of 2024 from the same period a year earlier, data from the U.S. Energy Information Administration showed.
For the year, U.S. imports accounted for 1.7% of China's crude oil imports, worth about $6 billion, according to Chinese customs data, down from 2.5% in 2023.
However, China's LNG imports from the U.S. have been growing, totaling 4.16 million metric tons last year worth $2.41 billion, customs data showed, nearly double the 2018 volume for the fuel used in power generation and accounting for about 5.4% of China's purchases.
U.S. LNG imported through long-term contracts can remain economical for Chinese buyers, even with tariffs, compared with spot prices, but they are likely to shy away from buying U.S. spot cargoes, said ICIS analyst Alex Siow.
"Chinese companies will likely look for other spot sources, such as from Asia," he said. "It may not be easy to find them, given that 2025 continues to be a tight market." Tariffs will also impact Chinese importers seeking new long-term supply deals with the U.S., especially second-tier buyers such as utilities or city gas companies that lack trading capabilities, said a Beijing-based LNG trader.
The US is the top global LNG shipper but the No. 5 supplier to China. However, the US has ambitions for a sharp increase in LNG exports in the coming years under Trump, with China, the world's biggest importer of the fuel, seen as a potential customer for more.
MST Marquee energy analyst Saul Kavonic said tariffs by China, which bought about 10% of US LNG exports last year, would push more US volumes to Europe and benefit other regional producers such as Australia.
"The negative impact on US LNG from these tariffs will only partially offset the strong desire of other buyers to get more US LNG under pressure from Trump to rebalance the trade deficit," he said.
FGE analyst Mia Geng said when China imposed a 25% tariff on US crude during the trade war in Trump's first administration, it stopped buying 300,000-400,000 barrels of US crude per day and turned to alternatives such as West African and Asian supplies.
"We are still assessing this internally but it looks like we will see a pause in buying while light and sweet alternatives are sought. This has impacted about 100,000 bpd of recent U.S. inflows, which is not a huge amount for Chinese refiners," he said.
The tariffs will make U.S. West Texas Intermediate crude flows to China expensive compared to alternatives such as Kazakhstan's CPC and Abu Dhabi's Murban, Sparta Commodities analyst June Goh said. (Newsmaker)
Source: Investing.com
