China-Australia relations: LNG imports hit record in April due to industrial demand, climate change pledge
- Shipments from Australia totalled 3.06 million tonnes last month, accounting for about 45 per cent of China’s total liquefied natural gas (LNG) imports
- The market share of Australian LNG in China has dropped to around 40 per cent in the first four months of this year from 46 per cent in 2019
China’s liquefied natural gas (LNG) imports from Australia hit a record high in April, bolstered by robust industrial demand and Beijing’s climate change pledges, and analysts expect they will remain strong despite souring relations between the two countries.
Shipments from Australia to China totalled 3.06 million tonnes last month, up 10 per cent from the same period last year and accounting for about 45 per cent of China’s total LNG imports, data from the General Administration of Customs showed.
The market share of Australian LNG in China has dropped to around 40 per cent in the first four months of this year from 46 per cent in 2019, as exporters such as Russia and Indonesia made more spot trades, but Australia remains the biggest supplier of the clean fossil fuel to China.
“State-owned enterprises purchase most of China’s LNG imports and they do that mostly on contract. We estimate only 5 per cent of current spot cargo imports is at risk,” said ANZ analyst Daniel Hynes.
Despite increasing spot trades by second-tier gas importers, mostly city-gas firms, contracted cargoes still dominate LNG imports, making up more than 75 per cent.
Beijing could look at changes in regulation or alternative sources for its LNG to reduce dependence on Australia for this transition fuel.
Wood Mackenzie analyst Gavin Thompson said Beijing could look to further impact Australian LNG exporters by introducing hefty import tariffs, though that could prove too painful for Chinese consumers or deter its buyers from signing new long-term contracts with Australian projects.
Chinese firms are in talks with Qatar, the biggest LNG exporter in the world, to partner in the expansion of North Field projects as an effort to diversify its gas sources.
But in the near-term, Australian LNG shipments to China would rise slightly from current levels, Hynes expects, as it is the only producer with enough spare capacity to meet the surging demand in China.
Around 3.16 million tonnes of LNG are scheduled to arrive in China from Australia in May, while 2.05 million tonnes were heading to Chinese ports as of Friday, according to Refinitiv trade flows data.