Page 9 - GLNG Week 35

GLNG COMMENTARY GLNG

The ups and downs of

Chinese LNG imports

Chinese LNG imports are recovering but there are

warnings that a winter buying spree of the fuel by the

Asian country should not be expected

PERFORMANCE CHINA’S imports of LNG are rebounding, hav- Bouncing back
ing taken a hit earlier this year when the country It has been a dramatic year for Chinese LNG
WHAT: locked down in an effort to combat the corona- buyers – and indeed other industries that were
China’s LNG imports are virus (COVID-19) pandemic. Data from Chi- affected by the country’s lockdown earlier this
recovering after taking a na’s General Administration of Customs (GAC), year. China – where COVID-19 originated –
hit earlier this year, but a updated last week, show that the country imported was the first country to institute a lockdown to
surge of purchases over 5.03mn tonnes of LNG in July, which was up 3.1% fight the spread of the virus, and also the first to
the winter should not year on year, but down 13.1% on June. cautiously emerge from lockdown.
necessarily be expected. And this week Reuters reported, citing Ref- The country’s restart coincided with LNG
initiv Eikon data, that Chinese LNG imports in prices falling to new lows as much of the rest
WHY: August looked set to hit nearly 6.4mn tonnes. If of the world went into lockdown. And China
The country is taking this figure is accurate, it would mark an increase appeared keen to ramp up LNG imports again,
advantage of low LNG of 20% on July and of 24% y/y. It would also be taking advantage of these low prices. In the sec-
spot prices now to the highest amount of LNG to be imported by ond quarter of this year, its LNG imports rose by
stockpile the fuel ahead China in a month this year. around 20% y/y, compared with just 2.9% in the
of peak winter demand. The Refinitiv Eikon data show Russia and first quarter.
Indonesia among the countries accounting for As a result of rebounding LNG imports, Chi-
WHAT NEXT: the jump in supply to China last month. nese gas storage capacity has been filling faster
Shipments of gas that The surge in imports has prompted specula- than usual. Indeed, according to consultancy
were deferred during the tion that China is stockpiling gas ahead of the JLC Network Technology, gas injection into
worst of the pandemic upcoming peak winter demand season, and underground storage sites in the country began
will also come due in the trying to take advantage of low LNG spot prices in March – a month earlier than usual – this year.
winter. in the process. As a result, traders and analysts LNG tanks at import terminals on the coast are
are warning that those counting on a surge of also seeing high levels of utilisation.
Chinese LNG purchases this winter could be “Spot LNG prices were attractive to Chinese
disappointed. importers, which led to higher injections,” a JLC

Week 35 04•September•2020 www. NEWSBASE .com P9