Diversions or outright purchases of shipments from other origins will come at a hefty price
[BEIJING] Chinese liquefied petroleum gas buyers have prompted a price surge as they scramble to replace US supplies of the widely used fuel following Beijing’s tough response last week to Washington’s punitive tariffs.
Buyers are trying to swap US cargoes that have already been purchased with alternatives, including LPG from the Middle East, traders said. But swaps, diversions or outright purchases of shipments from other origins will come at a hefty price, they added, due to the sudden nature of China’s requests and the large volumes involved.
The premium of Middle East-origin LPG compared to all shipments delivered into East Asia – including US cargoes – widened to over US$100 per tonne late on Friday (Apr 4), said traders. The price spread, known to the industry as the Saudi contract price vs Argus Far East Index swap differential, remained at that level in early Monday trade.
Buyers had hoped that LPG, used everywhere from plastics manufacturing to domestic kitchens, would be spared as China sought to hit back following President Donald Trump’s “reciprocal” tariffs. American LPG made up around 60 per cent of China’s total imports in 2024, according to China customs data, with volumes almost four times as much as China’s second-largest source, Abu Dhabi.
Instead, China on Friday said it would impose a 34 per cent tariff on all imports from the US starting Apr 10.
Two dozen or so LPG tankers are currently en route to China from the US, traders said. Cargoes may be diverted to other destinations in Asia, where South Korea, Japan and India are among major buyers.
As well as LPG, America is a major supplier of crude oil and liquefied natural gas to the world – although China’s imports of crude of those two products have dwindled in recent months. BLOOMBERG
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