The tariff friction has escalated further,
with the US announcing additional tariffs on global goods, including a
cumulative 54% tariff on Chinese products. In response, China has imposed an
additional 34% tariff on US LNG imports. This article analyzes the impact of
these tariffs on China's natural gas supply, demand, and prices.
1.
Impact on Supply:
- US LNG’s Limited Share: US LNG accounts for a small portion of China’s total LNG imports
(5.6% in 2024) and an even smaller share of overall natural gas supply
(1.4%). Historical experience shows that previous tariffs on US LNG had a negligible
impact on China’s natural gas supply and LNG market prices.
- Minimal Direct Impact: The additional tariffs are expected to halt US LNG imports during
the tariff period. However, the 25% year-on-year decrease in March LNG
import ship schedules is mainly due to high spot LNG prices, which have
reduced import willingness and downstream demand.
2.
Impact on Demand:
- Supply Determines Consumption: China’s natural gas market operates on a supply-determined
consumption model. The stable growth of domestic natural gas production,
increased pipeline gas imports, and diversified LNG import sources ensure
the stability and security of natural gas supply.
- Economic Impact on Demand: The US tariffs may increase production costs and disrupt trade,
potentially affecting China’s export-oriented industries (e.g., textiles,
glass, and steel) and leading to a decline in natural gas demand. However,
China’s scale advantages and policy initiatives (e.g., the Belt and Road)
can mitigate these impacts.
3.
Impact on Prices:
- Spot LNG Price Volatility: Tariff-related news may cause short-term fluctuations in spot LNG
prices. However, strong European restocking demand and limited global LNG
supply capacity in 2025 may support spot LNG prices, leading to a tight
market balance and higher domestic LNG prices.
- Pipeline Gas Price Stability: Pipeline gas prices will primarily follow annual pricing
contracts, with minor year-on-year increases. Factors such as tariff
impacts on economic indicators and seasonal temperature changes will
influence contract prices outside the main agreements.
The additional tariffs on US LNG have
minimal direct impact on China’s natural gas supply. However, US tariffs on
Chinese goods may indirectly affect natural gas demand. The key factor
influencing LNG imports and downstream demand is the spot LNG price trend.
According to forecasts, China’s LNG imports may decrease by 5.4% in 2025, while
natural gas consumption is expected to grow by 3.5%.