Chinese national energy companies have begun emergency resales of U.S. liquefied natural gas cargoes after Beijing’s 25% retaliatory tariffs rendered American shipments commercially unviable. At least three China-bound LNG vessels originally destined for Sinopec and CNOOC have been diverted to Europe and Asia spot markets, with traders reporting discounts of $2.50/MMBtu below benchmark prices.

The fire sales come as China’s LNG importers face a perfect storm:

• Tariff Math: The 25% duty adds ~$(vs.$7.50 Asian spot prices)
• Contract Loopholes: Buyers exploiting “destination flexibility” clauses in long-term deals
• European Windfall: Traders estimate EU buyers saving $200M/month on diverted cargoes

Market data reveals the scale of disruption:

• U.S. LNG exports to China plunged 89% month-over-month to just 2 cargoes in June
• Asian spot premiums over European prices narrowed to $from$3.20 in January
• Henry Hub futures show December contracts trading at 18-month lows

“The tariffs have effectively severed the U.S.-China LNG bridge,” said Wood Mackenzie analyst Mia Nguyen. “Sellers are scrambling to reroute 2024’s 85 contracted U.S. cargoes worth $6.7 billion.”