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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

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

Week 36 10•September•2020 www. NEWSBASE .com P9