China Bails on US LNG Deal Over Tariff Fears

Chinese buyers of the first US liquefied natural gas (LNG) cargo in over a year are opting to resell it on another market instead of importing it into China. The cargo, which arrived at the Yangpu port in south China last month, was offloaded into bonded storage due to a 25% tariff that would have been imposed on its importation. According to sources familiar with the plans, the buyers intend to sell the gas for higher prices elsewhere.

The move suggests that China is not willing to pay the tariff to resume importing US LNG, despite a recent rebound in Chinese imports of LNG amid higher seasonal demand. In June, China's LNG imports rose by 8.3% from a year earlier to 5.68 million tons, marking the second consecutive month of increased imports.

The buyers' decision to resell the cargo is likely driven by the desire to profit from higher prices elsewhere, rather than absorbing the losses associated with the tariff. The Yangpu port has recently welcomed an empty tanker that will load the gas for re-export, according to vessel-tracking data.