China's growing imports of LNG from non-Asia-Pacific countries has helped push up tonne mile demand in the sector by 30% this year, according to a top shipbroker.
The average haul of Chinese LNG imports has been trending upwards since the first quarter of 2020, reaching a record high of an estimated 4,700 miles in the last quarter, up 14% on the 2020 average, according to Clarksons.
"This has largely been driven by rapid growth in imports from non-Asia-Pacific countries, which accounted for 26% of total Chinese LNG imports in the third quarter of 2021, up from 13% in the first quarter of 2020 and accounting for 76% of China's import growth across this period," the shipbroker said.
Clarksons said rapid growth in imports from the US has been the most "significant driver" with volumes reaching 6.9m tonnes in the first nine months of 2021.
This is more than double the 2020 total and has been driven by export capacity expansions in the US and the signing of the China-US trade deal last year.
Meanwhile, imports from Asia-Pacific have grown by a more moderate 14% year on year between January and September, with growth held back by fewer recent export project start-ups in the region, the shipbroker said.
Clarksons said Chinese LNG imports have expanded rapidly over the past five years on the back of firm economic growth and an expanding natural gas grid.
Imports have grown by a compound annual growth rate of 28% to 67m tonnes in 2020, which represents 19% of global imports, and accounts for 44% of global LNG trade growth in this period.
"While 2020 saw a slightly slower pace of growth of 11% than in previous years, partly reflecting the drop in imports in the first quarter amid Covid-19 disruption, a quick 'restart' to the economy in the second quarter and low LNG spot prices through the year supported continued expansion overall," Clarksons said.
In the first nine months of 2021, strong upwards momentum in imports has returned, with volumes up 23% year-on-year to 59m tonnes.
"Robust gas demand as the economy has rebounded from disruption last year, and ongoing coal-to-gas switching have supported demand, and while imports are estimated to have eased back a little in October amid high gas prices, across full year 2021 Chinese LNG imports are projected to grow by a firm 18% to 79m tonnes," Clarksons said.
Looking ahead, Clarksons said several factors are expected to support further growth in Chinese LNG imports.
"In the short-term, recent power shortages and elevated winter gas demand are expected to stimulate demand. Further ahead, growth in coming years is expected to be aided by supportive government policies aimed at reducing carbon emissions and the recent signing of long-term LNG supply contracts," the shipbroker said.
"Further expansion in China's regasification terminal capacity is also expected; some 60 million tonnes per annum (mtpa) is currently under construction, with plans mooted for a further 82 mtpa."
