FIRST TAKE: US action against Chinese shipping BULLISH for LNG prices/freight if implemented Eric Yep • US has proposed special fees on Chinese (and China-adjacent) vessels at US ports • Move is bullish for LNG prices and freight rates if implemented, as it will raise US LNG procurement costs and disrupt trade • Additional 10% tariff on China from March 4 risks more retaliation; no US LNG delivered to China since previous tariff The United States Trade Representative (USTR) office is proposing a fee of up to $1.5 million for each port call by a Chinese-built ship or Chinese shipping company, along with a sliding scale of fees for non-Chinese operators with Chinese ships in their fleet. The move will be BULLISH for LNG prices and LNG carrier freight rates if implemented due to disruption of trade flows and impact on both Chinese and non-Chinese operators. USTR also penalizes companies with ships on the order book of Chinese yards that are yet to be delivered. Details of how fees will be applied, any exceptions, and timing remain unclear and await a public hearing scheduled for March 24. Chinese LNG importers had already stopped importing US cargoes following China’s imposition of a 15% retaliatory tariff on US LNG on Feb. 10. The USTR move would confirm the de facto closure of the Chinese market to American cargoes as a levy of $1 million translates into 33 cents/MMBtu of additional cost per cargo. Meanwhile, US President Donald Trump said on Feb. 27 that an additional 10% tariff would be imposed on March 4, further escalating trade conflict. One USTR provision calls for US companies to export a certain percentage of their cargo volume on US-built ships, which is unrealistic for LNG as the US currently does not build any LNG carriers. An exemption or workaround for LNG likely lies ahead. Around 6% of the current active LNG fleet is Chinese-built, and 30% of the order book is with Chinese yards, largely to transport US LNG to China. The shipping restrictions will mainly hit other sectors but will also affect the growth of China’s LNG fleet and shipping companies. Large LNG players like Qatar, Japan, China and South Korea have traditionally viewed control over LNG shipping and shipbuilding as strategic, while the US has left shipping largely to the market. The severity of the shipping levy’s implementation will determine how disruptive its impact on prices will be. Demand for non-Chinese ships and operators will help put a floor on LNG carrier day rates that have dropped to record lows of under $10,000/d for two-stroke carriers. Read on Platts Connect: https://tinyurl.com/h9232exd