As China celebrates the Lunar New Year, global supply chains are feeling the pinch, with significant disruptions to production, logistics, and trade. The holiday, combined with closures in key markets like Singapore, has led to a slowdown in factory output and shipping activities. The impact of the holiday extends well beyond the official festivities, affecting global trade flows for weeks before and after the break. Congested ports and reduced freight capacity are causing delays across multiple industries, and recovery will be slow as backlogs need to be cleared post-holiday.

The slowdown has caused substantial ripple effects, especially in sectors like liquefied natural gas (LNG). China, as the world’s largest LNG importer, has been facing weak domestic demand for natural gas, while its storage levels grow due to a lack of heating demand amid mild winter weather. As a result, several state-owned and secondary oil and gas companies have been looking to offload LNG cargoes slated for January and February to alleviate mounting inventory pressures. This surge in selling interest coincides with the fact that cold weather has been too short-lived to trigger the usual spike in heating demand, further suppressing the overall demand for LNG.

Despite sporadic demand for spot cargoes from Europe, which would normally push prices higher and tighten supply, the LNG market faces a muted response. Traders are struggling to shift surplus stock into the domestic market, which signals a delayed recovery after the Chinese New Year holidays. Analysts suggest that the combination of stagnant domestic demand and inventory build-up may result in a subdued LNG market well into the coming months.

Moreover, the potential for a new round of U.S. tariffs looms large. President Donald Trump is reportedly considering implementing a 10% tariff on Chinese-made goods starting February 1, with some sectors facing tariffs as high as 60%-100%. Such drastic tariff actions would likely provoke retaliatory measures from China, which could ignite a trade war with far-reaching consequences for global supply chains and markets

In the midst of these challenges, some progress has been made in LNG contracts. QatarEnergy and Shell have entered a long-term agreement to supply China with three million tonnes per year of LNG, beginning this month. Additionally, TotalEnergies extended its sales agreement with CNOOC for a five-year term, guaranteeing continued LNG deliveries to China until 2034. LNG will not replace coal in China’s power generation mix. Coal remains far more economical than LNG, making it unlikely that LNG will play a dominant role in China’s energy future in the short term.

As the post-holiday recovery unfolds, supply chain strains and economic uncertainties will continue to shape global trade, especially in the energy and chemical sectors. Industry leaders will need to brace for a volatile period ahead, with LNG prices and demand trends remaining highly unpredictable.