Lower LNG purchases by China could bolster Europe’s security of gas supply in the coming winter and reduce prices, the business daily Handelsblatt reports referring to ICIS data. Chinese LNG demand is expected to fall to 73 million tons in 2023, down from 70 million tons in 2021 as Asia’s largest economy has not made a full recovery.
If China had made a full return to pre-pandemic gas demand this year, it might have unilaterally consumed all additional LNG supply from capacity established during the past year, for example from Africa or the United States, the International Energy Agency (IEA) commented.
Lockdowns to contain the pandemic had caused an unprecedented 20 percent plunge in China’s LNG imports which facilitated a swift growth in LNG deliveries to Europe as it struggled to replace missing Russian supplies. By March 2023, however, China’s imports of the super-chilled gas recovered to double-digit figures with analysts anticipating full-year inflows to rise between 10 and 15 percent year-on-year while remaining below record 2021-levels.
But that rapid demand rebound did not materialise and “now there are signs that the situation is easing,” Handelsblatt wrote, referring to higher imports of pipeline gas from Russia and Central Asia to China and subsequently little demand for spot LNG.
Weather risk still remains, meaning a cold winter in both Europe and East Asia could lead to a scramble for available LNG cargoes. Analysts reckon it will take another month or two for LNG demand trends to properly emerge as cities like Shanghai only set out plans in June 2022 to move out of Covid-19 lockdown and restore normal economic activities.
In June, Chinese LNG imports were up 23.7 percent amid lower prices and more regasification capacity coming online, though deliveries were less than in the previous month. Shipments to China’s 25 regas terminals increased to 5.96 million tonnes in June, up from 4.82 million tons in June 2022 when lockdowns were just being lifted. But June deliveries were significantly lower than in May 2023, when China imported 6.41 million tons, data from the General Administration of Customs show.
