Mubasher: China held back on liquefied petroleum gas (LPG) imported from the US, resorting to the Middle East for more supplies, amid escalating trade tension between the world’s largest two economies.

During this year, LPG imports from the US slipped dramatically ahead of a complete halt of purchases in late August, when China slapped an additional 25% duty on more than 300 US goods, including LPG, in response to US tariffs.

US LPG imports dropped to almost 1 million tonnes over the first eight months of this year from around 2.1 million tonnes for the comparable period of the prior year, IHS Markit’s natural gas liquids executive director He Yanyu.

The US shortfall is being offset mainly by Qatar, the UAE, Saudi Arabia and Kuwait, according to analysts.

This shift came as prices for the fuel, usually a mixture of propane and butane, surged in line with oil price hikes.

State-run Saudi Aramco held its propane and butane futures prices at four-year record high of $655 per tonne.

In the US, propane prices at the Texan Mont Belvieu hub reached its highest since 2014 two weeks ago at around $0.108 per gallon, easing later to $0.104. This means a price for a tonne would come in at around $542 per tonne, which is above the Saudi Aramco contract prices, after including the carrier and terminal costs as well as the 25% tariff.

China purchased around 3.6 million tonnes of US LPG last year, bringing the US to Beijing’s second largest supplier for fuel used in petrochemical industry, cooking, transport and heating.

The fall came as Chinese importers wound back US LPG purchases as uncertainty lurked about the impact of buying products from Washington, a trader told Thomson Reuters who traces the fuel.

“China has stopped shipping in U.S. LPG cargoes as they are now too expensive,” another trader, who tracks LPG shipments, said.

In the same vein, no LPG shipments from the US have landed in China since duties took effect in late August, according to FGE senior consultant Ong Han Wee.