The ongoing US-China trade war has raised concerns about a key driver of LNG shipping demand – the trade flow between the US and China – but it is also expected to further the commoditization of LNG as it creates more trading opportunities and the need for shipping optionality. China in early August threatened to impose a 25% tariff on US LNG imports, in retaliation for another round of US tariffs on $200 billion worth of Chinese products. LNG market participants have indicated that China’s proposed tariffs on US LNG, and the subsequent readjustment of trade flows, is probably the biggest disruption the industry has faced since Japan’s Fukushima earthquake in 2011, and bigger than the trade embargo on Qatar in 2017. The biggest market tapped by US LNG so far has been China, where government anti-pollution policies are pushing end-users to switch from coal to gas. Average LNG shipping distances have increased the most for LNG originating from the US in the past five years, to 9,268 nautical miles/voyage in 2018, from 3,771 nautical miles/voyage in 2014, according to S&P Global Platts Analytics. Beijing did not give an implementation date for the tariff, but the uncertainty left Chinese buyers… continue reading
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Source: CTRM Center