Trade tensions weigh on shipments as operators seek cheaper alternatives

US exports of liquefied natural gas to China are expected to continue their recent decline, as Chinese utilities seek alternative suppliers amid the Sino-US trade dispute.

The Ministry of Commerce said it might impose a 25 percent tariff on US LNG imports if US President Donald Trump follows through on his recent threat to escalate trade tensions.

The potential tariff has driven many Chinese importers toward other suppliers, concerned that the tariffs, once implemented, could make US LNG unaffordable in the near term.

"This would be a major blow for US companies in the LNG sector, as many Chinese utilities have already indicated they wouldn't take US cargoes for any new spot deals if the trade war continues," said Li Li, research director at energy consulting company ICIS China.

"China is making efforts to find other natural gas resources before winter, when gas demand is expected to surge, especially for heating," she said.

Several Chinese utilities told China Daily that the potential tariff introduction might deter spot procurement of US volumes in the near term, as it could erase companies' margins and companies would be unable to absorb the costs in the event of strong domestic demand.