BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
COOKIE NOTICE

Register with us today

and in less than 60 seconds continue your access to: Latest news headlines Analytical topics and features Commodities videos, podcast & blogs Sample market prices & data Special reports Subscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

IF you are a Platts Market Center subscriber, to reset your password go to the�Platts Market Center to reset your password.

In this list
Agriculture | Natural Gas | Oil | Metals | Petrochemicals

China hits US oil products, LPG with new tariffs but backs off crude for now

Electric Power | Natural Gas | Oil | Shipping

Market Movers Europe, Oct 22-26: Record low Rhine disrupts commodity flows; Trump gives traders fuel for thought

Natural Gas | Natural Gas (North American) | Crude Oil

Platts Upstream Indicator

Commodities | Metals | Non-Ferrous | Shipping | Autos & Capital Goods | Materials | Building & Construction | Transportation | Aerospace & Defense | Financial Services

Aluminum Symposium

Oil

US Republican Senator Graham says would 'sanction the hell out of Saudi Arabia'

China hits US oil products, LPG with new tariffs but backs off crude for now

Highlights

Latest move in tit-for-tat trade war

New 25% tariffs effective August 23

Includes coal, cars, waste metals tariffs

London — China announced Wednesday retaliatory tariffs on an additional $16 billion worth of US imports, including oil products, LPG and coal in a new list of affected goods but leaving off widely-expected import duties on US crude.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The Chinese Ministry of Commerce's latest list imposes 25% tariffs on a swathe of energy commodities from August 23 including "asphalt shale, oil shale and tar sand."

But the ministry said the latest tariffs remove a previous reference to US crude in earlier proposals announced on June 16. Naphtha, propane and butane all remain on the new list which also covers waste metals, petrochemical products and cars.

The latest tit-for-tat escalation in the trade war between the two countries comes after the US earlier Wednesday said it would implement a 25% tariff on an additional $16 billion worth of Chinese imports from August 23.

Removing crude from the list may reflect China's inherent energy security concerns, ClearView Energy Partners said in a note Wednesday.

"Simply put, crude may have been a bluff -- and LNG could be too -- and energy scarcity may have led China to retreat from its threat posture," managing director Kevin Book said in the note.

Another explanation could be that China is rationalizing its crude import policies to defend its plan to continue importing Iranian crude after US sanctions snap back November 4.

"China may be seeking to substantiate its argument that its energy security concerns demand imports of all crude -- from the US as well as Iran -- despite escalating US-China trade conflict," Book said.

US tariffs implemented on July 6 saw China retaliate by imposing a 25% tariff on $34 billion worth of US imports of food products, agricultural commodities such as soybean, and motor cars. China's Ministry of Commerce said then that it has been "forced to fight back." China has already shortlisted US LNG imports for 25% tariffs in a previous round of retaliatory duties announced on August 3, but this has yet to be implemented.

In addition to energy commodities including road fuels, naphtha and coal, the latest list covers waste metals and cars under the $16 billion worth of US products that China will target from August 23.

The US exported 141,000 b/d of petroleum products to China in May, a 10-month low, according to US Energy Information Administration data. The exports averaged 229,000 b/d in 2017, up from 181,000 b/d in 2016. The data shows that the US sent 52,000 b/d of LPG to China in May, an 11-month low. The exports averaged 147,000 b/d in 2017 and 115,000 b/d in 2016.

Expectations of tariffs on US crude and LPG imports have already hit import volumes and trade flows.

China's crude oil imports from the US fell sharply in July from June, and are expected to drop even further in August.

CRUDE, LNG TRADE

The US is not a major supplier of LNG to China, representing just under 5% of total Chinese supply in 2017 and moving up to around 7% so far this year.

If China decides to hit US crude and LNG in subsequent rounds of the trade spat, Citibank predicted the move would weaken prices in the near term, including for Atlantic Basin cargoes, but would not ultimately pose a significant challenge to US exports.

"Whether in the long or short run, China's potential imposition of tariffs or quotas on US exports is a tax on Chinese consumers rather than an obstacle to US exports," said Ed Morse, Citi's global head of commodities.

"Longer-term seasonal and secular trends see rapidly growing US market share in oil, LNG, and NGLs, come what may," he added.

China received 14.65 million barrels of US crude in June, which was a historical high, but volumes more than halved to just 6.9 million barrels in July, according to Platts' vessel tracker cFlow. Arrivals in August are expected to shrink even more to around 6 million barrels.

The drop is reflected in changing trade patterns of oil tankers loaded with US crude headed to Asia and procurement by state-run Unipec, the trading arm of China Petroleum & Chemical Corp or Sinopec, the world's largest refiner by capacity.

Oil tankers laden with US crude that were initially headed to China appear to be being diverted to other buyers, cFlow data showed.

Unipec had purchased nearly 16 million barrels of light sweet US crudes in June. These cargoes included the WTI Midland, Eagle Ford, Bakken and Domestic Sweet Blend grades, and were expected to be delivered to China over July-August.

--Robert Perkins, robert.perkins@spglobal.com

--Oceana Zhou, oceana.zhou@spglobal.com

--Meghan Gordon, meghan.gordon@spglobal.com

--Edited by Jeff Mower, jeff.mower@spglobal.com