China to Resell First U.S. LNG Cargo in Over a Year Instead of Importing It
Key Takeaways
- •The cargo was the first U.S. LNG shipment to reach China in over a year.
- •The buyer placed the shipment in bonded storage because a 25% tariff would have applied if it were imported into China.
- •Sources said the shipment was bought with the aim of reselling it in a market where prices are higher.
- •Bloomberg’s vessel-tracking data showed an empty tanker docking at Yangpu, likely to load the LNG for re-export.
- •China’s LNG imports rose 8.3% year on year in June to 5.68 million tons, marking a second consecutive month of annual growth.
Chinese buyers that received the first U.S. liquefied natural gas cargo to arrive in China in more than a year plan to resell the shipment in another market, according to sources familiar with the matter cited by Bloomberg on Monday.
The cargo arrived earlier this month at Yangpu port in southern China from Venture Global’s Plaquemines LNG export terminal in Louisiana’s Plaquemines Parish. It was the first U.S. shipment of gas to China in over a year. However, the gas was placed into bonded storage rather than being imported into China because the buyer would have faced a 25% tariff on the cargo.
According to Bloomberg’s sources, the shipment was purchased with the intention of reselling it in a non-Chinese market where prices are higher. Vessel-tracking data monitored by Bloomberg showed that an empty tanker recently docked at Yangpu, likely to load the gas for re-export.
The development underscores how tariffs and shipping economics can shape LNG flows even when cargoes reach their destination. Instead of being absorbed into China’s domestic market, the shipment appears to be moving through the broader global trade network, where buyers can redirect cargoes depending on pricing and contract terms.
Even as the Middle East war has disrupted Qatari and UAE exports for five months, China’s LNG imports have recovered in recent weeks amid stronger seasonal demand. China increased LNG imports for a second consecutive month in June as the world’s largest LNG buyer prepared for peak summer power demand.
Official customs data released last week showed that Chinese LNG imports rose 8.3% from a year earlier to 5.68 million tons in June. It was the second straight month in which imports exceeded the year-earlier level, after three months of declines in February, March and April.
Imports began to recover in May, rebounding from an eight-year low, after buyers started purchasing more cargoes in mid-April. Since then, China has maintained a relatively high import pace.
China’s large state-owned LNG importers are also reportedly in talks to secure long-term LNG supplies from exporters that do not depend on the Strait of Hormuz, as the world’s biggest LNG buyer looks to reduce its exposure to gas deliveries from the Persian Gulf, sources familiar with the plans told Bloomberg earlier this month.
By Charles Kennedy for Oilprice.com