China's mostly LNG offtake in March amounted to 4.80mmt, our data indicated, which constituted broadly steady monthly demand compared to the 4.76mmt we recorded in February.
However, Chinese demand in March and February considerably lacked behind imports during the previous report period of January and December, where LNG imports stood at 7.36mmt and 7.99mmt, respectively. As such, the subdued demand during the current report period of February-March comes in the wake of high demand growth during the previous report period. Chinese LNG imports had increased by 0.92mmt (13 percent) to 7.99mmt in December from 7.07mmt in November alongside high demand and a resulting tight market in the Far East. However, these imports had subsequently decreased by 0.63mmt (-8 percent) to 7.36mmt in January. The demand reduction morphed into a demand slump in the report period of February-March 2022 compared to the previous two-month report period of December-January, decreasing by 5.79mmt (-38 percent) from 15.35mmt to 9.56mmt. The amount imported during the report period also constituted a significant net decrease of 1.28mmt (-12 percent) over the 10.84mmt we recorded during the February-March period of 2021, which is reflective of the extremely tight market and commensurate high prices in the Far East. Accordingly, China's annualised LNG import capacity during the report period stood at roughly 63 percent, down 39pp from around 102 percent for the previous report period of December-January.
Chinese LNG prices during the report period were reflective of the rise in Brent following Russia's invasion of Ukraine. They were also an indication of a continued tight market in the Far East, in which spot cargoes still demanded a steep premium as South Korea, for example, increased its buying activity, our data show. There was a brief period of relatively low demand ? and domestic prices ? surrounding the Chinese Spring Festival in early February but these rebounded quickly. Although parts of China continue to be subject to intermittent lockdowns to combat local outbreaks of coronavirus, these have had relatively little bearing on LNG prices, Chinese customs data suggest.
After domestic LNG prices had plummeted in December, they began to climb again by the middle of January to reach new highs of up to US$27/mmBtu during the report period. Previously, privately quoted domestic prices had decreased from a high of around US$23.60/mmBtu on 15 November to US$11.14/mmBtu on 24 December before settling in between US$12.34/mmBtu and US$15.95/mmBtu in January. The price range expanded to US$26.55/mmBtu in February and to US$27.17/mmBtu in March whilst the floor remained at US$12.34/mmBtu during both months. In February, domestic prices were at an average of US$18.54/mmBtu whilst the average increased to US$23.07/mmBtu in March.
Meanwhile, the average domestic price indicated by the National Bureau of Statistics (CNBS) stood at US$25.60/mmBtu in March, which represents an increase of US$5.62/mmBtu (28 percent) from US$19.98/mmBtu in February and an increase of US$9.77/mmBtu (62 percent) from US$15.83/mmBtu in January.
Landed LNG prices had climbed down from their peak of around US$40.38/mmBtu in w/c 6 December last year to an average of US$33.01/mmBtu in January and US$23.50/mmBtu in February, according to our calculations based on Chinese customs data. However, prices had returned to growth by mid-February to peak at US$27.07/mmBtu that month and at US$29.99/mmBtu in March before falling back to US$22.98/mmBtu at the time of writing.
LNG demand saw a substantial decrease in the north of China during the report period, our data indicated at the time of writing, decreasing by 3.29mmt (51 percent) from 6.48mmt in the two months of December-January to 3.19mmt for the report period of February-March. The largest share of LNG influx into the region during the report period took place via the Tianjin - Nangang LNG terminal. The region thereby reverted to period-on-period demand decrease following significant growth during the previous report period. The sum of LNG imports of 3.19mmt in northern China for the period of February - March this year was also behind its equivalent of 3.75mmt in 2021, down by 0.56mmt (-15 percent).
China's North led by Tianjin-Nangang LNG
Leading the roster of northern terminals by volumes imported, Tianjin-Nangang LNG took in 0.92mmt during the report period of February-March. This constituted a significant offtake decrease of 0.43mmt (-32 percent) from 1.35mmt in the previous two-month period. Imports consisted predominantly of four Qatari cargoes amounting to 0.36mmt. Australia also delivered four cargoes, supply ing 0.30mmt. In addition, Malaysia LNG delivered two cargoes totalling 0.11mmt. The remaining two shipments totalling 0.15mmt were delivered from the United States and Papua New Guinea.
Caofeidian LNG, meanwhile, had offtakes amounting to 0.80mmt over the report period compared to 1.80mmt over December- January. The terminal thus saw a decrease in imports of 1.00mmt (56 percent). Cargoes from the Middle East totalled 0.58mmt and thereby represented more than two-thirds of LNG shipped to the terminal. Qatar exported 0.53mmt to Caofeidian LNG during the report period, inter alia via Q-Max vessel Rasheeda. There was also a single shipment from the UAE's Das Island plant via the Umm Al Ashtan during the report period.
A single Atlantic Basin shipment of 0.08mmt, meanwhile, came via a Zeebrugge re-exports aboard the Yamal Spirit. Finally, Caofeidian LNG’s imports from the Pacific Basin amounted to 0.14mmt, comprising a cargo each from Australia’s Australia Pacific LNG and a shipment from Malaysia LNG via the CESI Gladstone and the Seri Cemara, respectively.
Imports at Qingdao LNG were the third highest in northern China, even as they had been slashed by 0.53mmt (-43 percent) to 0.71mmt in February-March from 1.24mmt in December-January, according to our data. The bulk of imports came from the Australia Pacific LNG plant, amounting to 0.41mmt via six cargoes. Pacific supply was complemented by four PNG LNG exports. However, in contrast to the previous report period, Qingdao did not see shipments from Indonesia, Malaysia or the United States. As during the previous report period, Qingdao LNG also did not import LNG from the Middle East.
Tianjin LNG and Dalian LNG
The remaining two northern terminals – Tianjin LNG and Dalian LNG – imported 0.62mmt and 0.14mmt over the report period, respectively, which in the case of Tianjin LNG stemmed predominantly from Australia with 0.29mmt, all of which was derived from Queensland Curtis LNG. Two shipments totalling 0.12mmt from Russia’s Sakhalin-2 LNG as well as a 0.07mmt export from PFLNG Dua in Malaysia completed the scope of Pacific Basin supply.
Middle Eastern supply, meanwhile, comprised two cargoes totalling 0.14mmt via the Oman LNG-derived Aristos I and the Ras Laffan-derived Al Thakhira.
February-March supply to the Dalian terminal was exclusively sourced from the Atlantic Basin, with supply of 0.07mmt coming via a shipment from Russia’s Yamal LNG aboard the Yari LNG. The cargo was transferred onto the vessel from the ice-breaking carrier Vladimir Rusanov at Murmansk in January for onward transportation via Suez. Atlantic Basin supply to Dalian also extended to a Zeebrugge re-e xport of 0.07mmt via the Clean Vision.
At the time of writing, demand in East China was dominated by the wider Shanghai area, where Jiangsu LNG imported 1.12mmt during the report period. This placed the terminal among China’s leading terminals in February-March. Accordingly, it operated at well above- nameplate capacity. Overall LNG demand in East China, however, had decreased drastically by 1.04mmt (-25 percent) to 3.08mmt from the 4.12mmt recorded in December-January.
Wider Shanghai area
Meanwhile, the remaining wider Shanghai area – comprising Qidong LNG, Shanghai LNG and the metropolis’ peak-shaving facility – imported a total of 1.03mmt over the report period, down 0.79mmt (-43 percent) from the 1.82mmt recorded in December-January. The sub-region’s imports were led by the Shanghai L NG terminal, which took in 0.65mmt and thereby decreased imports by 0.33mmt (-34 percent) period-on-period. Shanghai’s peak-shaving facility also reduced imports relatively significantly by 0.03mmt (-12 percent) to 0.23mmt period-on-period. However, the Qidong LNG terminal had curtailed offtakes most drastically by 0.43mmt (-74percent) to 0.15mmt by the end of March, our data indicate.
Zhejiang & Zhoushan LNG
At neighbouring terminals Zhejiang and Zhoushan LNG, imports amounted to 0.79mmt and 0.14mmt, respectively. Together, the two terminals thereby decreased imports by 0.32mmt (-24 percent) to 0.93mmt from the 1.81mmt recorded in December-January. LNG was mainly supplied by Australia via eight cargoes totalling 0.45mmt and Qatar through two shipments totalling 0.18mmt. 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 – did not continue with the demand growth seen during the previous report period, our data indicate. The region’s imports had amounted to 3.29mmt over the report period, which meant imports were down by 1.46mmt (-31 percent) from the 4.75mmt recorded in December-January.
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 1.16mmt, placing it in first place among China’s terminals, and before Jiangsu LNG. The terminal nevertheless cut its February-March imports by 0.21mmt (-15 percent) from 1.37mmt over the previous two-month period. Factories in Shenzhen had been subject to a coronavirus lockdown during the winter period, according to a manufacturer of PC case parts. Still, Guangdong Dapeng LNG’s average capacity utilisation stood at 102 percent over the report period, which resulted in neighbouring Shenzhen Diefu LNG importing 0.49mmt and pegging its terminal utilisation at 74 percent. Shenzhen Diefu usually steps in when GDLNG is stretched beyond capacity. However, we did not record LNG deliveries to either Dongguan LNG or the Shenzhen Peak-shaving terminal.
Zhuhai and Jieyang LNG
Zhuhai LNG saw a significant decrease in demand by 0.16mmt to 0.42mmt over the report period from 0.58mmt the previous period, which pegged overall capacity utilisation at 73 percent. More than half of Zhuhai’s imports were derived from Qatar’s Ras Laffan LNG complex. Concurrently, the Pacific Basin supply amounted to only 0.11mmt, which was supplied by Queensland Curtis LNG in Australia and Sakhalin-2 LNG in Russia. The remaining import of 0.07mmt stemmed from Equatorial Guinea’s EG LNG.
In line with Zhuhai, Jieyang LNG also saw a substantial decrease in imports during the February-March period. Full-period offtakes were down by 0.31mmt (-44 percent) to 0.40mmt in February-March from 0.71mmt in December-January. Accordingly, Jieyang LNG only saw capacity utilisation of 57 percent over the report period compared to full utilisation in December-January. The terminal has ascended to become an important indicator of Chinese LNG demand since the inauguration of China’s state-owned China Oil and Gas Pipeline Network (also known as PipeChina) last year. PipeChina links the Jieyang terminal to Guangdong Province’s existing pipeline network and further to China’s massive West-East II and III trunklines. Between its commissioning in 2017 and the launch of PipeChina, the terminal had suffered from frequent periods without shipments arriving because its send-out options were mostly limited to truck loadings.
Fujian and Beihai LNG
In In line with most other terminals in the South China region, Fujian LNG saw demand decrease in February-March compared to the previous report period of December-January. At 0.28mmt, imports were down 0.34mmt (-55 percent) from the 0.62mmt recorded during the previous period. The terminals capacity utilisation, therefore, stood at only 27 percent. Meanwhile, Beihai LNG also saw significantly lower demand over the report period by curtailing offtakes by 0.19mmt (-41 percent) to 0.27mmt in February-March from 0.46mmt in December-January. The terminals’ annualised capacity utilisation stood at 54percent for the report period.
The remaining two regional LNG terminals – Hainan LNG and the Hainan Transfer Station on Hainan Island – saw a significant demand increase mainly due to higher activity at the Hainan LNG terminal. Whilst the Transfer Station saw its two-month offtake remain steady at 0.03mmt compared to the previous period, Hainan LNG grew imports by 0.07mmt (41 percent) to 0.24mmt in February-March from 0.17mmt in December-January. This was due to an increase in re-exports from Beihai LNG to the terminal as well as a partial discharge of a Sabine Pass LNG cargo via the Golar Maria in February. LNG capacity utilisation on Hainan Island over the report period was thus 48 percent.