Japan may be an unexpected beneficiary of the ongoing trade dispute between the US and China as shipments meant for Asia’s largest consumer find their way to other energy-hungry nations in the region. American crude oil and liquefied natural gas imports into Japan during the January-October period broke previous annual records, according to data from the Asian nation’s Ministry of Finance. Purchases of US liquefied petroleum gas are also on track to set a new record this year, with coal imports nearing their 20-year high, the data show. The rising trade tensions that evolved from tit-for-tat tariffs first imposed by President Donald Trump have led buyers from China, the world’s top energy consumer, to turn away from American supplies. This prompted sellers to seek out other outlets for their cargoes as a boom in the US shale industry outpaced domestic demand and lifted exports.
“As China seeks to reduce its dependence on US supplies amid the trade war, it’s cutting imports of American crude, LPG and LNG. That has raised the availability of US fuels to other countries, and Japan is benefiting from it,” Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp said by phone from Tokyo. “Japan may maintain high levels of US fuel imports particularly crude and LPG” as the discount for US prices against benchmarks in the Middle East has widened after trade tensions escalated, Nogami said. American oil’s become relatively cheaper versus supplies from the Middle East because of the US’s move to reinstate sanctions on Iranian oil at a time of record-high domestic crude production. That has incentivised purchases of grades such as WTI Midland by Japan, Asia’s third-biggest crude oil buyer.
As for natural gas, purchases by the world’s biggest LNG buyer rose after a new production plant in the US began exporting LNG via long-term contracts earlier this year, ahead of the start-up of more projects scheduled for operations in coming years. Meanwhile, China halted purchases of American crude in August for the first time since September 2016, compared with nearly 12mn barrels in July, US Census Bureau data showed.The country has also avoided US LNG after it slapped a 10% tariffs on the fuel in September.
Sources and photo-credits: Bloomberg, Gulf Times