When it comes to commodities, despite the trade war, China is the country you must focus on. Meanwhile, the Chinese are (finally) serious about curbing the rampant pollution in their country, observes Tony Daltorio, editor of Growth Stock Confidential.

That has led to China markedly cutting back on the use of coal for both power and heating purposes. As a substitute for coal, China is placing a major emphasis on natural gas.

The all-of-a-sudden big increase in natural gas demand has had almost immediate effects, particularly on the market for liquefied natural gas.

China's LNG imports jumped 46% in 2017 to 38.1 million metric tons. This was the first time that imports of LNG exceeded gas imports delivered by pipeline, according to data from the country's customs agency. China has overtaken South Korea to become the world's second-biggest importer of LNG and it is expected to surpass even Japan by the end of the next decade.

In other words, this change in China's energy mix is a long-term change. The International Energy Agency forecasts China's natural gas demand will rise upward of 4% a year through 2040, boosting LNG prices over the long-term.

Despite the trade war, this bodes well for the number one exporter of LNG from the U.S. — Cheniere Energy (LNG). It had the first U.S. LNG export terminal, which has been in operation since early 2016. As of October 31, 2018, more than 475 cumulative LNG cargoes have been exported from its SPL Project, with deliveries to 29 countries and regions worldwide.

Chiniere's first mover advantage in China is evident with the signing of a major long-term contract with a major Chinese firm. Cheniere had been selling LNG cargoes on a spot basis to China since 2016.

Last November, it signed an $11 billion memorandum of understanding for long-term LNG sales with China National Petroleum Corporation (CNPC), which is the parent of PetroChina (PTR).

And now that deal has come to fruition; CNPC will purchase about 1.2 million metric tons of LNG annually with a large portion of the purchases starting in 2023. The contract runs through 2043 and will be linked to the Henry Hub U.S. natural gas benchmark as well as having a fixed component.

This is the first ever long-term contract to supply China with U.S. liquified natural gas! This will be a long, profitable relationship between Cheniere and China. In my view, Cheniere — a conservative idea for 2019 — is a buy on any weakness from trade war worries.

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