China receives first US LNG shipment since March 2019: cFlow

A BP-chartered tanker delivered the first US LNG cargo to China in 13 months on Monday, after tariff exemptions that followed an initial trade agreement between the two countries made the shipment more economical.

The resumption of US deliveries to China -- the last one was in March 2019 -- could provide more optionality for the market heading into summer, especially as European storage fills up.

How much volume China can absorb is uncertain, as Northeast Asian spot LNG prices remain low and the potential for a second wave of the virus in the region looms. Reports of more cargo cancellations and deferments and an extension of the lockdown in India due to the virus have further dampened sentiment.

In the near-term, at least, the Maran Gas Vergina's arrival is positive for US exporters, which have been eager to serve the world's second-largest LNG importer behind Japan.

The Greek-owned tanker, which loaded at Freeport LNG in Texas last month, pulled alongside the pier for the port city of Tianjin, on China's northern coast, around 8:30 pm Houston time on Sunday (0130 GMT Monday), according to cFlow, S&P Global Platts trade-flow software.

The top LNG receiving port in China is home to regasification facilities operated by China National Offshore Oil Corp. and Sinopec. Earlier this year, state-owned distributor Beijing Gas won government approval to build a 5 million mt/year LNG receiving terminal in Tianjin.

At least five other tankers that loaded on the US Gulf Coast are headed to China as of Sunday, Platts cFlow showed. Three of them showed Tianjin as their captain's destination -- the Palu LNG, SK Resolute and Hoegh Giant. The captain's destination for the Cool Explorer and Arwa Sprit doesn't currently specify a port in China.

The RWE-chartered Palu LNG, which loaded at Cheniere Energy's Corpus Christi Liquefaction in Texas, is expected to arrive April 22, followed on April 24 by the Cool Explorer, which is under charter to Cheniere and loaded at the exporter's Sabine Pass terminal in Louisiana.

The Total-chartered SK Resolute, which loaded at Sempra Energy's Cameron LNG in Louisiana, is scheduled to arrive in China on April 29, while the Naturgy-chartered Hoegh Giant, which loaded at Sabine Pass, is set to arrive on May 5.

The Cheniere-chartered Arwa Spirit, which loaded at Corpus Christi Liquefaction, showed a scheduled arrival in China on May 8, according to Platts cFlow.

US LNG exporters are preparing to release their financial results for the January-March quarter and their outlooks for the rest of the year. The reports will give the market a clearer idea of the challenges they may face in placing cargoes in the months ahead.

In the fall of 2018, China imposed tariffs of 10% on imports of US LNG in retaliation for duties the US placed on imports of Chinese goods. The tit-for-tat tariffs were raised to 25% by Beijing in June 2019.

Then in January, China promised to increase its energy purchases from the US by $52.4 billion over the next two years, as part of the initial trade agreement that Beijing and Washington signed. The purchases are to include LNG.

The following month, China said it would begin offering a limited number of tariff exemptions on certain commodities, including LNG, based on volume and market demand.