The escalating trade war between the Washington and Beijing is cutting into US liquified natural gas exports bound for China as fewer vessels carrying US LNG have sailed for the Asian country over the past few months.  

China purchased 14 per cent of all US LNG between Feb. 2016 – Apr. 2018

China is cutting back on its purchases of liquified natural gas from the United States as the trade war between the two countries intensifies.

According to a report by Reuters, fewer vessels carrying US LNG have sailed for China in the past two months.

Between February 2016 and April 2018, China purchased 14 per cent of all US LNG exports.  In May, China took delivery of just on LNG vessel that originated in the United States and none in June.

During the first four months of the year, China took delivery of 14 LNG cargoes.

But, the trade war is not the only reason for the slowdown.  Seasonal factors and increased Australian LNG production are also possible explanations for the reduction in shipments.  A Reuters source who is with a Chinese state-run energy giant said the decline was seasonal.

Reuters reports that one vessel that left a US port this month is on its way to China and there are three other tankers in the Pacific that sailed from the US this month or last without a destination listed that could end up in China.

China has threatened to put levies on US energy exports as part of the trade war with the Trump administration, although it did not specify LNG in the list of goods to be tolled.

Beijing has been working towards a shift away from coal-fired power generation in an effort to clean up pollution in China and LNG plays a major role in the move.

By 2019, the US is expected to be the world’s third largest LNG exporting country by capacity.