Factbox: Escalating US-China trade war rattles energy and commodity markets


Trade hostilities between the United States and China continued to escalate this week as each side announced new tariffs with a number of potential market impacts, including slowing long-term export growth American LNG.

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Late Monday, the White House announced new tariffs on $200 billion worth of Chinese goods starting Sept. 24, including various aluminum and steel items that were excluded from the tariffs imposed in March. Hours later, China announced retaliatory tariffs on $60 billion of US imports, including a 10% tariff on LNG effective the same day.

The bond comes as a second wave of U.S. LNG export projects scramble to secure financing to make final investment decisions. This new obstacle to exploiting Chinese demand, which S&P Global Platts Analytics expects to reach 10 Bcf/d within 10 years, could harm the chances of certain projects moving forward.

“A number of export projects vying for long-term offtake contracts are now effectively shut out of the Chinese market, which is expected to account for one-third of global LNG demand growth over the next five years,” he said. said Ross Wyeno of Platts Analytics. “It could give an advantage to non-US suppliers like Canada, the Middle East and Russia.”

Meanwhile, US crude oil exports to China, which hit record highs in June, are safe for now with the exclusion of oil in this announcement.

The White House statement promised a round of phase three tariffs if China retaliated. This next phase would include an additional $267 billion worth of goods.

Here are the key takeaways for all products:



**US LNG exports are unlikely to be affected in the near term as shipments may go to other destinations, freeing up supply for China. But a change in trade flows could affect the flexibility of the LNG spot market.

** China accounted for 15% of US LNG exports in 2017, according to the US Energy Information Administration.

** The United States accounted for about 5% of China’s LNG imports in 2017, according to Platts Analytics.


**The tariffs will likely drive US LNG out of the Chinese market, but there is no expected price impact in the near term.

**Platts November JKM was valued at $11.764/MMBtu on Tuesday, with the quick month contract dropping about 30 cents after rolling through November due to lower fall demand.


** In the United States, there are at least 25 potential LNG export projects, representing approximately 27.7 billion cubic feet per day of capacity, that are in various stages of pre-development and actively seeking buyers.

Related video:Chinese LNG imports set to rise this winter with or without tariffs on US supply



** The U.S. Trade Representative said Monday that more aluminum and steel items from China, including aluminum scrap and stranded wire as well as stainless and alloy steel products, will be subject to to a customs duty of 10% from September 24. The duty rate will increase to 25% on January 1, 2019. Copper, zinc, molybdenum, lead, cobalt, tin and titanium will also be subject to a tariff.

** The US initially imposed a 25% tariff on US steel imports on March 23. After early panic buying pushed U.S.-made steel prices up 41% from January to July, domestic prices are now down more than 7% since mid-July. .

** U.S. imports of Chinese steel (all products combined) fell 17.3% year-to-date through July to 392,740 metric tons from 474,790 metric tons for the same period in 2017, according to the U.S. Department of Commerce’s International Trade Administration.


** The S&P Global Platts price valuation of U.S.-made hot-rolled coil steel continued to decline on Tuesday, down $2.25/t from Monday at $853.50/t , with no apparent reaction to the latest news on the various metal products.



** After months of concern over the risk of Chinese duties on U.S. crude, the commodity has been excluded from this round of tariffs.

** The risk of tariffs has contributed to the fall in US crude exports to China in recent months after a record 510,000 bpd in June, which accounted for 23% of the country’s crude exports, data shows. of the EIA.

** US crude exports to China could be hampered by less lucrative spot arbitrage. Platts’ calculations show that WTI is roughly at par with 1940s North Sea crude on a China-delivered basis. But in July – when exports were higher – WTI was at a discount of more than $2.50/bbl to the North Sea Forties. The economics between WTI and ADNOC’s Murban shows a similar trend.


**NYMEX first-month crude futures rose 94 cents on Tuesday to $69.85/bbl. Fears that a trade war between the United States and China could lead to lower demand growth eased after Beijing excluded crude from its retaliatory tariffs.

Related video: How are Asian crude flows reacting to the US-China trade war and sanctions on Iran?



** The new tariffs decrease the likelihood that a 25% tariff on US soybean exports to China will be removed anytime soon.

**The move reinforces expectations that China will continue to rely primarily on Brazil for soybeans.

**Brazil exported 50.85 million tons of soybeans to China in the first eight months of 2018 at a value of $20.3 billion. China has been the destination for 78% of Brazilian soybean exports so far in 2018, according to customs data.


** CBOT November soybean futures traded at a lifetime low of $812.25/bushel during Tuesday’s session and settled 9.5 cents lower at $817 / bushel, with Chinese demand for US soybeans expected to remain under pressure.

** Bids for new crop soybean shipments from Brazil to Paranagua were up 16% day-over-day.

–Joe Fisher, [email protected]

–Joe Innace, [email protected]

–Jeff Mower, [email protected]

— Sophie Byron, [email protected]

— Edited by Keiron Greenhalgh, [email protected]


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