Asia's imports of US LNG to surge, but likely not enough for Trump

Reuters

5 hours ago

LAUNCESTON, Australia, Aug 21 (Reuters) - There are early signs that some Asian countries are stepping up their imports of U.S. liquefied natural gas (LNG) as part of trade deals with President Donald Trump.
Asia's imports of the super-chilled fuel are on track to hit an eight-month high of 2.01 million metric tons in August, according to data compiled by commodity analysts Kpler.
But of far more importance is the Kpler estimate that Asia's LNG imports from the United States will surge to 3.61 million tons in October, which would be the second-highest on record behind the 3.75 million from February 2021.
There are caveats to the October prediction insofar as these are cargoes that have been arranged on a preliminary basis and may not actually load.
But even if there is some slippage in actual volumes, it's likely that October will still see a surge of U.S. LNG arriving in Asia.
The buyers for all this LNG have yet to be fully disclosed, but initial destination data suggest the bulk is heading towards North Asia, and this largely means Japan and South Korea.
The world's second- and third-largest LNG buyers both committed to ramp up their energy imports from the United States as part of deals reached with Trump on import tariffs and investment.
Japan didn't commit to an exact figure, but the White House website said on July 23 that Tokyo has committed to a "major expansion" of energy purchases from the United States.
South Korea undertook to buy energy products worth $100 billion from the United States in a deal announced by Trump on July 30, although the time frame for that value to be reached wasn't made clear.
However, the $100 billion figure looks high when compared with how much LNG, crude oil and coal South Korea has historically imported from the United States.
South Korea imported 5.71 million tons of U.S. LNG in 2024, which at the current Asian spot price of $11.65 per million British thermal units works out to a total of $3.45 billion.
Japan imported 6.50 million tons of LNG from the United States in 2024, according to Kpler, which would have a value of around $3.93 billion at current prices.
Even if a tripling of LNG imports from the United States is assumed for Japan and South Korea, the combined value comes only to an annual total of around $22 billion.
But the volume imported would rise to around 36 million tons, or about 42% of the 84.8 million tons the United States exported in 2024.
U.S. LNG exports are likely to increase in coming years as new plants come online, but its capacity will be overwhelmed by demand if every country that has pledged to massively boost its imports as part of trade deals actually tries to follow through.
Trump said the European Union agreed to buy $250 billion a year for three years of U.S. energy, a figure I described as delusional once the actual volumes needed to meet this figure were considered.
What is not delusional is that most countries that have struck deals with Trump will at least make some effort to meet the terms of the deal, even if they all know the stated amounts are unrealistic.
Even trying to buy more LNG, crude oil and coal from the United States has the potential to disrupt trade flows around the world and distort pricing.
For example, if Japan did triple its LNG imports from the United States to an annual level of around 20 million tons, this would mean that it would likely buy about 12 million tons less from current suppliers such as Australia and Qatar.
Japan would likely end up buying virtually no spot cargoes and would also likely be forced to sell term cargoes at discounts to other buyers.
It's unlikely Japanese utilities would be willing to wear losses just in order to try to keep Trump happy, so the chances are there is an upper limit as to how much U.S. LNG they will be willing to buy.
Furthermore, it's likely that an upper limit is well short of what Trump believes it should be.
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The views expressed here are those of the author, a columnist for Reuters.