China Stops LPG Importation From US Amidst On-going Trade Spat

LPG
A worker moves a liquid petroleum gas (LPG) cylinder at a workshop in Karachi, Pakistan September 17, 2018.
(Photo: REUTERS/Akhtar Soomro)

China held back on importations of liquefied petroleum gas (LPG) from the United States as the two countries embroiled in a tit-for-tat trade spat, market watchers said, adding that the world's second largest economy is now setting its eyes towards the Middle East for extra supplies of the fuel.

In 2017 alone, China purchased close to 4 million tonnes of LPG from the US, which made the Western country one of the biggest suppliers of the said energy source primarily used in processing petrochemicals, transport, and heating, as well as for cooking, CNBC reported.

However, things changed for Washington in 2018 when Beijing issued a retaliatory tariff order on over 300 US imports including the aforementioned crude product.

According to the data provided over by the Consultancy HIS Markit to the publication, US imports of LPG dropped to a million tonnes in the first two quarters of 2018. It went down even further to around 2.1 million tonnes, later on, the Executive Director for Natural Gas Liquids, He Yanyu, said.

Market watchers and analysts concur on the implications indicating the altered attitude of the Chinese buyers towards the US in light of the recent trade war that is being engaged by the two powerful economies as one of the primary reasons why the Asian nation has backed down abruptly on the energy deal.

According to Reuters, there are virtually no single LPG cargo vessels coming from the US that have landed in any of the ports in China since the retaliatory 25 percent tariff on over $60 billion US imports were implemented in late August.

Citing the statement from a consultancy firm, the news agency said that Beijing has already stopped shipping US LPG supplies since the latest tariff which now made the fuel too expensive for the Chinese market.

In replacement for the slack left by the US LPG import, China is now turning its eyes eastward for supply, primarily in Qatar, the United Arab Emirates, Saudi Arabia, and Kuwait.

Bad News for the US

According to a report from Oil Price, this latest economic move from China could spell bad news for the fuel production industry in the US.

As indicated in the report cited from S&P Global Platts, China Gas has announced its plan to increase its annual imports of LPG from 2.8 million tons to a whopping 20 million tons in the next five years.

Aside from the obvious reasons like a higher demand for the fuel, the state-held energy firm is now well into the petrochemicals industry which would need a greater amount of supply for LPG.

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