Russell: China's LNG imports are falling, which is helping Asia to adjust to the Iran war losses.
In April, Asia's LNG imports are expected to fall to their lowest level in nearly six years as the Strait of Hormuz effectively closes off Qatari cargoes.
It could be argued, despite the volume loss, that Asia's markets for LNG are better able to adjust to the fallout from the U.S.-Israeli attacks on Iran than those of crude oil and refined goods.
The world's largest buyer of super-chilled gasoline, China, is doing its part to reduce imports. Smaller and less wealthy buyers, such as Pakistan, are also being forced to lose cargoes.
Analysts at Kpler, a commodity research firm, estimate Asia's LNG imports for April to be 19.03 million tons. This is down from the peak of 26.34 millions in December and 20.69 in March. The April arrivals were the lowest since the summer of 2020, and reflected a dramatic drop in Qatar's LNG volumes. Qatar supplied 20% of the global LNG prior to the Iran War. Asia's imports of LNG from Qatar in April are estimated to be 800,000 tonnes as the last of the cargoes which exited Strait of Hormuz before the U.S.-Israeli strikes on February 28, arrive at their destination.
In the three months before the war with Iran, the average volume of Asia's imports was just under 6 million tons. This was 88% of Qatar total volumes. The sudden drop in Qatari cargoes forced Asian buyers into a major adjustment.
Kpler estimates China’s LNG imports to be 3.36 million tonnes in April. This is the lowest level since April 2018, when 3.18 million tonnes were imported. It's also down from December, when 7.66 millions tons of LNG was imported.
China also resold cargoes. LNG exports reached a record of 720,000 tonnes in March but dropped to only 30,000 tons by April.
This shows that China's buyers of LNG have taken advantage of the price spikes caused by the Iran War to resell their cargoes.
Spot Asian LNG
In the week ending April 17, the price of mmBtu has dropped to $16.05 per unit, which is 54% more than it was before World War II.
Gasoil is the main component of diesel and has seen a price increase of 59%.
PAKISTAN and BANGLADESH
China's strong natural gas production and the pipeline supply from Russia and Central Asia have allowed it to reduce LNG imports. However, this is not true for South Asian nations.
Pakistan's LNG imports could drop to zero by April, as cargoes monitored by LSEG and due to arrive this month are stuck west of the Strait of Hormuz. They therefore have little chance of transiting the waterway to reach Pakistan.
According to LSEG, only two LNG cargoes were discharged in Pakistan during March, delivering just 150,000?tons, down from 489,000?tons and 721,000 tons respectively in February. Pakistan imports almost all of its LNG, and only one shipment from another country has arrived in the last year. This makes it extremely vulnerable to a closure of the Strait of Hormuz. Bangladesh was also heavily reliant upon Qatar, but has managed to secure cargoes through other suppliers and maintain LNG imports close to pre-war levels.
Bangladesh will receive 531,000 tonnes in April, down slightly from the 561,000 tons it received in March. Its suppliers include the United States of America, Australia, Oman Nigeria and Angola.
Bangladesh received only Qatari cargos in January and February.
The price increase in response to the war with Iran has made the fuel uneconomical for Pakistan's electricity generators.
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These are the views of a columnist, who is also an author.
(source: Reuters)
