Riyadh – Mubasher: The trade war between the US and China has led to an increase Saudi Aramco’s liquefied petroleum gas (LPG) sales to the Asian nation, Bloomberg reported.
So far in 2018, Aramco’s LPG sales to China reached 90% of all its shipments to the largest Asian economy in 2017, data from tanker-tracker Kpler showed.
Saudi cargoes to China surged to 970,000 tonnes in 2018, compared to 1.08 million tonnes for the full year 2017, the research firm said.
The rise in Saudi LPG sales to China was attributed to the ongoing trade war between China and the US, which has led Chinese importers to seek alternatives to American cargoes.
The trade war, which began earlier this year, has gone to include tariffs on billions of dollars’ worth of Chinese products. China has retaliated with similar measures on US products.
For July, state-owned Saudi Aramco raised contract prices for butane to $570 a tonne, a 23% increase from March’s contracts. Meanwhile, the price of propane grew 16% to $555 a tonne in May from March.
Buyers are turning to other sources of crude supply after China said it would impose 25% tariffs on US cargoes of propane and butane. The tariffs were forecast to go into effect on 20 July, according to Scott Gray, a senior director at IHS Markit in Houston.
“Prices may rise further for August on healthy demand in China and India for cooking fuel and petrochemicals,” an Asian customer told the news agency.
Moreover, the higher demand for Saudi LPG in China has impacted oil contract prices, global oil and gas consultancy FGE noted.
“Chinese importers will definitely avoid US LPG cargoes as much as they can,” Ong Han Wee, a consultant with FGE in Singapore told Bloomberg.
“I do not think President Xi, at the moment, has any intention of following through on the discussions we made […] I think Xi is holding the game up,” Kudlow added in a conference.
Earlier in July, the US said it was imposing an additional $200 billion in tariffs on Chinese products.
