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 six years as the Strait of Hormuz effectively closes. This will cut off cargoes coming from Qatar, a major LNG supplier.
It could be argued, despite?the volume loss, that Asia's markets for LNG are more successful at adjusting to fallout from U.S. and Israeli attacks on Iran.
The world's largest buyer of super-chilled gasoline, China, is doing its part to reduce imports. However, smaller, 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 reflect a dramatic drop in Qatari volumes. Qatar supplied 20% of global LNG prior to the Iran War. Asia's LNG imports are estimated to be 800,000 tonnes in April. This is because the last cargoes which left the Strait of Hormuz before the U.S.-Israeli strikes on February 28 have arrived 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. China has done most of the heavy lifting.
Kpler estimates China’s LNG imports to be 3.36 million tonnes in April, down from 7.66 million tonnes in December and the lowest since April 2018, when they were 3.18 million.
China has also been reselling cargoes. LNG exports reached a record of 720,000 tonnes in March but dropped back to only 30,000 tons by April.
This shows that China's LNG customers 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, however, has not been able reduce its LNG imports or resell the cargoes because of the strong natural gas production in the country and the pipelines from Russia and Central Asia.
Pakistan's LNG imports could drop to zero by April, as cargoes monitored by LSEG to arrive this month remain stuck west of the Strait of Hormuz. They are therefore unlikely to sail through the waterway to Pakistan.
According to LSEG, only two LNG cargoes were discharged in Pakistan during March, delivering a total of 150,000 tons?of LNG. This is down from 479,000 tonnes?in February, and 721,000 tons in the month of January. 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 with other suppliers and maintain LNG imports close to pre-war levels.
Bangladesh will receive 531,000 tonnes in April, a decrease from the 561,000 tons it received in March. Its suppliers include the United States of America, Australia, Oman Nigeria and Angola.
In January and February, Bangladesh received only cargoes from Qatar.
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)
