There are reports some Chinese power stations have been told not to take Australian coal, and the nation has put new inspection procedures on iron ore. However reports are saying some mining companies believe this could streamline processes. 

 

"We're supportive of the changes to the iron ore inspection process and believe it will create a more efficient supply chain for producers like us as well as our Chinese customers," BHP said in a statement. 

 

However China's nationalistic, if clickbait savvy, English language newspaper the Global Times quoted one Chinese academic who said the move was directly  "associated with how Australia has acted, and a general decline in demand for steel on the global level".  

 

It is a less certain threat than that made to Australian barley or cattle exports, though the former has apparently been a technical tariff issue for some time before Australia and China clashed over a COVID-19 investigation.  

 

Barley too, only represents a very small fraction of overall trade to China. 

 

LNG exports are a far larger component of trade with China. 

 

EnergyQuest data for April shows a rise in China's imports of Australian LNG for the month, and Australia its largest single supplier. 

 

It reported that total Australian April LNG shipments were 6.9 million tonnes or 101 cargoes, above March's 6.8MMt, also 101 cargoes. 

 

Of that, 40 ships went to China, higher than the 29 of March or 36 of the previous year. 

 

However deliveries to Japan were down to 36 in April over 46 in March but above the 33 sent there in April 2019. 

 

Most of Australia's LNG to China leaves from the three export concerns on the east coast, while the west coast facilities traditionally supply more of the Japanese market, all under long term contracts. 

 

All three have Chinese partners. 

 

In good news Origin Energy announced recently that it had renegotiated its offtake agreement with Sinopec at its operated Australia Pacific LNG plant, on the same terms. 

 

In April Arrow Energy, which is a joint venture between Shell and PetroChina, announced sanction of the Surat gas project. 

 

The first phase of the project will bring 90 billion cubic feet per annum of gas to market, to be sent via Shell's Queensland Curtis LNG export. 

 

Before the pandemic the main perceived threat to Australia's LNG export to China came from an end to the trade war between the huge Asian economy and the US. 

 

China agreed to take US$52.5 billion worth of American energy products over two years, beginning in 2020, though the target was largely dismissed as unrealistic at the time 

 

To put it in perspective the first year's requirement of a $30 billion-plus spend equated to the entire value of Australia's record breaking 77.5 million tonnes of LNG exported in 2019. 

 

At the same time with Japanese LNG imports a decade-low and a market awash with very cheap spot cargoes China could inflict some pain on producers, taking only the minimum level allowed by contracts. 

 

Any improvement in relations with the US -- however unlikely that seems at this point -- could mean it could take more American LNG given European gas stocks at near-full levels and unlikely to increase further as the continent heads into summer.