Energy
0

Saudis Reap Benefit From US-China Trade War

Saudis Reap Benefit From US-China Trade WarSaudis Reap Benefit From US-China Trade War

Saudi Aramco is winning thanks to US President Donald Trump’s trade war with China.

Sales of liquefied petroleum gas by the state-run producer to China—one of its biggest Asian customers—this year have already reached 90% of all shipments in 2017, according to data from tanker-tracking and intelligence firm Kpler, Bloomberg reported.

 That is because buyers in the Asian nation are seeking alternatives to American cargoes, as a trade war between the world’s two biggest economies escalates with tariffs targeting billions of dollars worth of products.

The surge in demand for LPG, used in everything from cooking to heating and petrochemical production, is also having an effect on contract prices that buyers elsewhere in Asia pay for Saudi cargoes, according to FGE. That means higher prices across the board for all customers to which Aramco supplies long-term cargoes, the industry consultant said.

“Chinese importers will definitely avoid US LPG cargoes as much as they can,” said Ong Han Wee, a consultant with FGE in Singapore. “More Saudi cargoes have been going to China after the announcement of tariffs. This has also partly lifted up the contract price.”

Saudi shipments to China have risen to 970,000 tons so far this year, compared with 1.08 million tons for the whole of 2017, Kpler reported.

"Buyers are turning to other sources of supply as the country slaps tariffs of 25% on US cargoes of propane and butane in the midst of the trade war. The levy is expected to go into effect on July 20," said Scott Gray, a senior director at IHS Markit in Houston. Saudi Aramco raised contract prices for butane to $570 a ton for July, 23% higher than in March. Propane term prices rose 16% to $555 a ton over the same period. Prices may rise further for August on healthy demand in China and India for cooking fuel and petrochemicals, according to a customer in Asia.

 

Add new comment

Read our comment policy before posting your viewpoints

Financialtribune.com