China’s LNG imports are expected to increase at a slower rate in the second half of the year due to surging prices. Analysts said China’s LNG purchases would increase by 12%-13% year-on-year in the second half, a marked slowdown from 28% year-on-year growth in the first half. Chinese gas users, including steel mills and glassmakers, have already felt the pinch from the rising prices. They are expected to either turn to domestic piped gas or reduce production.
Traders said that China’s LNG demand for October delivery had been little due to the high prices. Benchmark Asia spot LNG prices soared to record highs earlier this year, thanks to robust demand and production outages. This week, prices stood at CNY4.2 ($0.65) per cubic meter in Tangshan, the highest for this time of the year in at least a decade. For comparison, last year, the prices were just CNY1.7 per cubic meter.
Analysts said global LNG prices would remain elevated although China cut purchases. Despite the slowdown in the second half, China’s LNG imports are set to grow by 15-20% in the whole of 2021. At the same time, demand will remain robust in Europe when buyers are seeking to replenish stocks after extreme summer weather drains their inventories.
