Tankers Carrying U.S. LNG Heading to China After Tax Waivers Granted
Tankers carrying U.S. liquefied natural gas (LNG) are on their way to China after Beijing started granting tax waivers to some importers, according to shipping and trade sources.
This is the first time since March 2019 that shipments have resumed after a long-standing trade war that saw China raise tariffs on LNG imports from the United States to 25% last year.
Four LNG tankers are currently en route to China after loading cargoes last month in the United States, ship-tracking data from Refinitiv and data intelligence firm Kpler showed.
The tankers are expected to arrive in China between late April and early May, according to the data. One of them, SK Resolute has diverted at least twice, but is now heading to Tianjin, China, after loading its cargo from the Cameron LNG plant in Louisiana, the data showed.
Two others, Cool Explorer and Hoegh Giant, loaded from Sabine Pass, Louisiana, according to the data, and are now also heading to Tianjin, where China National Offshore Oil Corp (CNOOC) and Sinopec operate LNG terminals.
The fourth tanker, Palu LNG, loaded from Corpus Christi, Texas, on March 25 and changed its destination to Tianjin on Monday. It is due to arrive at the Chinese port on April 21, Refinitiv data showed.
Beijing has started granting tax waivers to LNG importers, three China-based sources familiar with the matter said, although details on the companies that have received exemptions on the tariffs were not clear.
One of the sources said the tariff has dropped to zero, although a separate value-added tax of 10% still applies.
Companies are asked to apply for tax waivers on a monthly basis and are required to report to the government once transactions are concluded, said another of the sources, a Chinese gas trader.
China announced in February it would grant exemptions on retaliatory duties imposed against 696 U.S. goods after both sides reached a phase 1 trade deal that took effect on Feb. 14. Firms were supposed to submit their applications on March 2.
Asian LNG prices <LNG-AS> dropped to a record low last week as demand plunged in several key importers, including India, where lockdowns to curb the spread of the coronavirus have restricted industrial output.
In China, though, where such measures are starting to be eased in some areas, demand is recovering as people get back to work and LNG shipments to China are expected to rise, two Singapore-based traders said.
(Reporting by Jessica Jaganathan and Chen Aizhu; Editing by Tom Hogue)