China’s monthly LNG offtake grew by 0.41mmt in August, increasing robustly by 7 percent to 6.20mmt. This constituted a rebound following a string of month-on-month reductions in July and June. Monthly Chinese LNG imports had decreased by 0.73mmt (-11 percent) to 5.79mmt in July from 6.52mmt in June.
Monthly Chinese LNG imports had thus also decreased by 0.61mmt (-9 percent) in June from imports of 7.13mmt recorded in May. Consequently, there was a slight reduction in the report period of June-August from the previous three-month period of March-May, decreasing by 0.63mmt (-3 percent) from 19.14mmt to 18.51mmt. Nevertheless, the 18.51mmt imported during the report period still constituted a net increase of 2.19mmt (14 percent) year-on-year. China’s annualised LNG import capacity, meanwhile, stood at an average of 82 percent for the report period, up 10pp from 72 percent for the equivalent period in 2020 but down 3pp from the 85 percent recorded for March-May.
Domestic gas prices saw a strong recovery whilst landed LNG prices over the report period climbed equally quickly.
The domestic LNG price increase we reported on in our previous report continued in June and July and rallied further in August. Privately quoted domestic prices had climbed from a low of US$8.66/mmBtu on 3rd March to US$ 12.41/mmBtu on 14th May before falling back to US$11.45/mmBtu on 31st May. Thereafter, domestic prices found their two-month peak at US$16.17/mmBtu on 31st July. In August, however, prices rallied to a peak of US$19.09/mmBtu on 31st August. Our initial price data for September suggests the increase is set to continue. Meanwhile, the average domestic price indicated by the National Bureau of Statistics (CNBS) stood at US$17.47/mmBtu on 20th August – the latest available data point – which represents growth of US$ 5.72/mmBtu (49 percent) from the US$11.75/mmBtu on 20th May, the last available data point in our previous report. Landed LNG prices saw a similar price rally over the report period, peaking at US$21.31/mmBtu in mid-August. This represented an increase of US$3.43/mmBtu (19 percent) from the peak of US$17.88/mmBtu during the previous three-month period of March, April and May, according to our calculations based on Chinese customs data. However, landed prices have begun to ease off a little since their August peak, arriving at around US$19/mmBtu towards the end of the month.
LNG demand saw a notable monthly reduction i n the north of China, decreasing by 0.34mmt (-6 percent) from 5.68mmt in the three months of March-May to 5.34mmt for the report period June-August. Mainly responsible for that reduction was the Tianjin-Nangang terminal. The North China region thereby discontinued the month-on-month growth of previous months. The sum of LNG imports of 5.34mmt in northern China for the period of June-August was thus also considerably lagging i ts year-on-year equivalent of 6.20mmt, down 0.86mmt (-14 percent).
China’s North led by Qingdao LNG
Leading the roster of northern terminals by volumes imported, Qingdao LNG took in 1.75mmt during the report period of June-August. This constituted steady offtakes p eriod-on-period. Imports consisted predominantly of 11 Australian cargoes amounting to 0.84mmt. Australia Pacific LNG d elivered nine of these shipments, supplying 0.69mmt. In addition, Papua New Guinea’s PNG LNG delivered seven cargoes totalling 0.51mmt. The remaining six shipments were delivered mainly from the United States and R ussia, comprising Sabine Pass LNG, Yamal and Sakhalin-2 LNG. The UAE and Cameroon also d elivered a shipment each from Das Island and the Kribi FLNG plant.
Tianjin LNG, meanwhile, had offtakes amounting to 1.11mmt over the report period c ompared to 1.09mmt over March-May. The terminal thus saw an uptick in imports by 0.02mmt (2 percent). Cargoes from the Pacific Basin totalled 0.59mmt and thereby represented more than half of LNG shipped to the terminal. Australia exported 0.48mmt to Tianjin LNG during the report period, inter alia via the Shell-controlled newbuild LNGShips Athena, the Flex Freedom and the CESI Qingdao. Leading Australian shipments to Tianjin were Darwin LNG and NWS LNG with 0.16mmt delivered each. Australia Pacific LNG and Pluto LNG shipped 0.08mmt each. Papua New Guinea and Indonesia delivered a total of 0.11mmt over the report period.
Atlantic Basin shipments of 0.46mmt to Tianjin LNG were led by the United States directing 0.34mmt to the terminal via four cargoes. The remaining two Atlantic shipments came from Cameroon and Russia’s Yamal LNG. In comparison, Tianjin LNG’s imports from the Middle East were relatively minor at 0.06mmt, comprising one cargo from the UAE’s Das Island plant via the Ghasha.
Tianjin - Nangang LNG
Although still in the top-three for North China, imports at Tianjin LNG had dropped significantly by 0.78mmt (-44 percent) in June-August compared to March-May. The facility did not import a Middle Eastern cargo but took in 0.71mmt from Pacific suppliers. Pacific supply was led by Australia with 0.43mmt delivered, followed by Tangguh LNG in Indonesia and Malaysia’s PFLNG Satu facility with 0.14mmt each. Atlantic cargoes comprised three cargoes from the United S tates (0.21mmt) as well as one shipment of 0.06mmt from Angola.
Caofeidian and Dalian LNG
The remaining two northern terminals – Caofeidian and Dalian LNG – imported 0.88 and 0.62mmt over the report period, respectively, which in the case of Caofeidian L NG stemmed predominantly from Russia’s Yamal LNG with 0.28mmt. The United States’ Cameron LNG, Nigeria’s Bonny Island LNG and E quatorial Guinea’s EG LNG completed Atlantic Basin supply with 0.19mmt. Australia, meanwhile, also supplied 0.19mmt to Caofeidian, 0.13mmt of which came from Gorgon LNG. Among Middle Eastern suppliers, Qatar exported 0.22mmt via the Q-Max vessels Bu Samra and Al Samriya.
June-August supply to the Dalian terminal was almost evenly split between the Pacific and Atlantic Basins, with only one shipment of 0.07mmt coming from the Middle East through Egypt’s Damietta plant. Dalian LNG’s Pacific supply of 0.27mmt came via one delivery each from Australia’s Queensland Curtis LNG and Australia Pacific LNG as well as one each from Brunei LNG and Sakhalin-2 LNG. Meanwhile, the four imports from the Atlantic Basin totalling 0.28mmt comprised a Nigerian s hipment in addition to one from Yamal LNG, Sabine Pass and a re-export from Dunkerque Le Clipton in France via the Pskov.
Demand in East China was dominated by the wider Shanghai area, where Jiangsu LNG i mported 1.58mmt during the report period. This placed the terminal at number three among China’s leading terminals in June-August. Accordingly, the terminal operated at above-nameplate capacity. Nevertheless, overall LNG demand in East China had decreased noticeably by 0.36mmt (-6 percent) to 5.47mmt from the 5.83mmt recorded in March-May.
Wider Shanghai area
Meanwhile, the remaining wider Shanghai area – comprising Qidong LNG, Shanghai LNG and the metropolis’ peak-shaving facility – imported a total of 1.62mmt over the report period, down 0.37mmt (-19 percent) from the 1.99mmt recorded in March-May. The sub-region’s imports were led by the Shanghai ( Yangshan) LNG terminal, which took in 0.94mmt. Qidong LNG, meanwhile, had offtakes of 0.38mmt whilst the city’s peak-shaving facility kept imports broadly steady at 0.30mmt.
Zhoushan and Zhejiang LNG
At neighbouring terminals Zhoushan and Zhejiang LNG, LNG imports amounted to 0.95mmt and 1.32mmt, respectively. Together, the two terminals thereby decreased imports by 0.16mmt (-6 percent) to 2.27mmt from the 2.43mmt recorded in March-May. LNG was mainly supplied by Australia via 18 cargoes totalling 1.12mmt and the United States through six shipments totalling 0.45mmt. Zhoushan LNG is one of the few LNG import terminals not controlled by one of the state-owned petrochemical giants PetroChina, Sinopec and CNOOC.
Regional imports in South China – where LNG demand is primarily determined by the southern industrial centre of Shenzhen – saw continued high demand levels in June-August, although this growth did not extend to all terminals. The region’s imports had amounted to 7.70mmt over the report period, which meant imports were up slightly by 0.15mmt (2 percent) from the 7.55mmt recorded in March-May.
South China’s imports were led by Shenzhen’s four terminals – Guangdong Dapeng, Shenzhen Diefu, Dongguan LNG and the adjacent peak-shaving facility. The region’s most prominent terminal – Guangdong Dapeng LNG (GDLNG) – saw offtakes of 2.55mmt, placing it at the top of China’s terminals. The terminal thus grew its June-August imports by 0.27mmt (12 percent) from 2.28mmt over the previous three-month period. Accordingly, its average capacity utilisation stood at 150 percent over the report period so that neighbouring Shenzhen Diefu LNG imported 0.71mmt, pegging its terminal utilisation to 71 percent. Shenzhen Diefu usually steps in when GDLNG is stretched beyond capacity. Finally, Dongguan LNG imported 0.14mmt, down 0.04mmt (-5 percent) period-on-period. The Shenzhen Peak-shaving terminal did not import LNG over the report period, compared to 0.06mmt in March-May.
Zhuhai and Jieyang LNG
Zhuhai LNG saw a significant increase in demand by 0.18mmt to 1.35mmt over the report period from 1.17mmt the previous period, thereby pegging overall capacity utilisation at 160 percent. Roughly two-thirds of Zhuhai’s imports derived from the Pacific Basin, led by Australia’s Queensland Curtis LNG with 0.40mmt. Atlantic Basin supply amounted to 0.29mmt, which was mostly supplied by 0.22mmt from Sabine Pass LNG in the United States as well as one Elba Island shipment of 0.07mmt. The remaining imports stemmed from two Middle Eastern shipments totalling 0.18mmt derived from Qatar’s Ras Laffan LNG complex.
Similarly, Jieyang LNG saw robust import growth, increasing offtakes by 0.08mmt (10 percent) in June-August from 0.79mmt in March-May. Accordingly, Jieyang LNG saw high capacity utilisation of 83 percent over the report period. In April-May, the terminal had seen explosive growth of 0.37mmt to 0.64mmt from 0.27mmt in February-March. As we reported earlier in the year, China’s state-owned China Oil and Gas Pipeline Network (also known as PipeChina) inaugurated a new pipeline connection in March. This linked the Jieyang terminal to Guangdong Province’s existing pipeline network and further to China’s massive West-East II and III trunklines. The increased connectivity boosted the terminal’s throughput capacity and made it a prominent delivery node in China’s LNG terminal network. Since commissioning in 2017, the terminal had gone through frequent periods without shipments arriving because its send-out options were mostly limited to truck loadings.
Fujian and Beihai LNG
Fujian LNG saw steep demand growth in June-August compared to the previous report period of March-May. At 1.05mmt, imports were up 0.21mmt (25 percent) from the 0.84mmt recorded during the previous period. Meanwhile, Beihai LNG saw lower demand over the report period by reducing offtakes by 0.32mmt (-6 percent) to 0.58mmt June-August from 0.90mmt in March-May. The terminals’ annualised capacity utilisations, therefore, stood at 67 and 77 percent, respectively.
The remaining two regional LNG terminals on Hainan Island – Hainan LNG and the Hainan Transfer Station – also saw a significant demand decrease. Whilst the Transfer Station continued to receive its regular cargoes via the Lucia Ambition (0.01mmt) – which, however, only amounted to 0.04mmt over the report period compared to 0.05mmt over the previous period – Hainan LNG decreased imports faster by 0.11mmt to 0.41mmt from 0.52mmt in March-May. LNG capacity utilisation on Hainan Island over the report period was thus 54 percent, down 14pp from 68 percent during the March-May period.