China is the world’s top energy importer but its purchases from the United States are relatively modest, blunting the impact of Beijing’s move on Tuesday to slap retaliatory tariffs on imports of U.S. crude oil, liquefied natural gas (LNG) and coal.
Shortly after tariffs on China imposed by U.S. President Donald Trump took effect on Tuesday, China’s Finance Ministry said it would impose levies of 15% on imports of U.S. coal and LNG and 10% for crude oil as well as on farm equipment and some autos, starting on Feb. 10.
Chinese imports of U.S. crude oil declined 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 U.S. Energy Information Administration showed.
For the full year, U.S. imports accounted for 1.7% of China’s crude imports, worth about $6 billion, according to Chinese customs data, down from 2.5% in 2023.
China’s LNG imports from the U.S. have been growing, however, totalling 4.16 million tons last year worth $2.41 billion, Chinese data showed, nearly double 2018 volumes for the fuel used in power generation and accounting for roughly 5.4% of China’s purchases.
The U.S. is the top global LNG shipper but is just the No.5 supplier to China. Still, it has ambitions for sharp increases in LNG exports in coming years under Trump, with China, the world’s biggest importer of the fuel, seen as a potential customer for even more.
Saul Kavonic, an energy analyst at MST Marquee, said China bought around 10% of U.S. LNG exports last year.
China’s tariffs will drive more U.S. volumes to Europe and benefit other regional producers such as Australia, he said.
“The negative impact on U.S. LNG from these tariffs will only partly offset the strong appetite from other buyers to procure more U.S. LNG under pressure from Trump to rebalance trade deficits,” he said.
CRUDE COSTS
Mia Geng, an analyst at FGE, said that when China imposed 25% tariffs on U.S. crude during the trade war in Trump’s first administration, China stopped its purchases of 300,000-400,000 barrels per day of U.S. crude and turned to alternatives such as West Africa and Asian supply.
“We are still assessing this internally but it looks like we will see a pause in buying while light-sweet alternatives will be sought after. This impacts about 100,000 bpd of recent U.S. inflows, which is not a big amount for Chinese refiners,” she said.
The tariffs will make flows of U.S. West Texas Intermediate crude into China expensive relative to alternatives such as Kazakhstan’s CPC and Abu Dhabi’s Murban grades, said Sparta Commodities analyst June Goh.
