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LNG trade booms ahead of winter

The global LNG trade is booming ahead of the Northern Hemisphere winter,
with Asia’s leading buyers ramping up deliveries, in competition with Europe

COMMENTARY THE global LNG trade is booming ahead of the energy trade was struck in January 2020. Beijing
Northern Hemisphere winter. The leading buy- then started awarding tariff waivers to importers
ers in the world – China, Japan and South Korea of US LNG in the spring as China reopened after
WHAT: – are ramping up imports this month, while in being the first country to lock down in response
Asian imports of LNG are the US, LNG exports have reached record highs. to the coronavirus (COVID-19) pandemic,
booming along with US The boom in US LNG exports provided some allowing LNG trade between the two countries
exports of the super- relief to buyers in Europe, but they face compe- to resume.
chilled fuel. tition from Asia as they scramble to replenish According to the US Energy Information
gas stockpiles ahead of the winter. Indeed, major Administration (EIA), the US began exporting
WHY: buyers in Asia are reported to be receiving more LNG to China again in March 2020, after a year-
Demand has surged cargoes than Europe. long pause, and trade between the two hit an
as countries reopen annual high of 214.4bn cubic feet (6.1bn cubic
following pandemic- On the rise metres) that year. Monthly US LNG exports to
related lockdowns while According to commodity consultancy Kpler, China have since hit a new record high of 51.7
anticipating additional China, Japan and South Korea are forecast to bcf (1.5 bcm) in August 2021, the latest month
consumption over the receive a combined 17.77mn tonnes of LNG in for which data are available.
winter. November, up from 15.41mn tonnes in Octo- Chinese firms have also played a prominent
ber. This will be the highest level since 19.01mn role in numerous LNG offtake deals with US pro-
WHAT NEXT: tonnes of the fuel were imported across the three ducers of the fuel that have been announced in
European imports of LNG countries in February. recent weeks. The most recent of these came this
have not been as high, The increase in shipments to the Asian coun- week, when Cheniere Energy said it had struck
but this could change tries is also backed up by port and vessel-track- a 20-year deal to supply LNG to China’s Foran
depending on how certain ing data compiled by Refinitiv, which puts their Energy Group. Cheniere has also recently made
trends play out. November imports at 16.62mn tonnes, up from deals with ENN Natural Gas and Sinochem,
15.13mn tonnes in October. while Venture Global LNG has announced deals
In China, imports of US LNG have more than with Sinopec. The deals are set to keep US LNG
tripled year on year over the first three quarters volumes flowing to China over the coming years,
of 2021 as the Asian country moves to reduce and illustrate at least some appetite for new long-
its greenhouse gas (GHG) emissions even as its term supply agreements.
economy recovers from the lockdowns at the In the shorter term, while LNG shipments
start of the coronavirus (COVID-19) pandemic. to Asia are rising, they have not yet reached the
The y/y increase is not surprising given that high levels seen last winter, when certain supply
a trade war had kicked off between the US and bottlenecks combined with a spike in demand
China under former US President Donald to send LNG spot prices soaring from pandemic
Trump. A deal aimed at reviving US-China lows. It is worth noting, though, that while

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