China intends - as a countermeasure to the additional tariffs of 10% imposed by President Trump on imported goods from China - to impose a 15% tariff on LNG imports from the USA from 10 February 2025, unless a last-minute agreement is reached.
This raises the question of what impact the 15% tariff could have on the currently tight LNG market. China has the option of either buying additional LNG elsewhere, for example from Qatar or Australia, and or increasing pipeline imports and or switching to coal and or expanding the RES even faster or bringing about a mix of the options mentioned.
The LNG market is expected to ease due to the planned commissioning of additional liquefaction capacities towards the end of 2025/beginning of 2026. While Europe imported 30 bcm less LNG in 2024 compared to 2023, the LNG volume in the other LNG-importing countries increased by 35 bcm. The difference roughly corresponds to the liquefaction capacity growth in 2024 - taking into account the ramp-up phase of the plants that came online in that year. Four additional plants will come online in 2025, namely Plaquemines and Corpus Christi in the USA, Greater Tortue in Senegal/Mauritania and LNG Canada. The commissioning of Golden Pass (USA) and Energia Costa Azul (Mexico), has been postponed to 2026. Additional capacity will also be available when plants that were in the ramp-up phase in 2024, such as Tangguh (Indonesia), Congo LNG and Altamira FLNG in Mexico, reach full load operation. Liquefaction plants that were struggling with technical problems in 2024 are also coming back online. This growth will be partially reduced by maintenance work and the closure of plant sections in 2025. In total, a liquefaction capacity increase of 39 bcm is assumed.
On the EU consumption side, it can be assumed that the shortfall of 15 bcm due to the transit stop by Ukraine and the larger storage refill volume (expected to be approx. 15 bcm more compared to 2023) will have to be offset by additional LNG deliveries. If consumption in Europe does not change, production in Europe remains stable and pipeline imports from non-Russian countries do not fall, additional demand of approx. 30 bcm can be assumed.
Global LNG imports are expected to increase by around 50 bcm - with the largest increase, apart from Europe, coming from China - meaning that the increase in demand would exceed the increase in liquefaction capacity by around 10 bcm. This missing 10 bcm will tighten the already tight LNG market even more and could lead to further price increases in the storage refill phase in Q2 - more likely Q3 2025.
If China actually imposes import tariffs on LNG from the USA from 10 February 2025, and China increases pipeline imports and uses coal instead of LNG - where possible - and also expands RES even faster, the situation on the LNG market could ease somewhat earlier than expected, to the benefit of Europe.
As the geopolitically relevant events change significantly on an almost daily basis, the above comments should also be seen in the light of these changes/aspects
