China’s monthly LNG offtake in February amounted to 4.99mmt, our data showed, which constituted significant negative monthly demand growth of 1.40mmt (-22 percent) from the 6.39mmt we recorded in January.
At 11.38mmt in total, Chinese demand during the reporting period of January and February thus decreased considerably by 2.31mmt (-17 percent) from total imports of 13.69mmt during the preceding two-month period of November and December 2022. China’s LNG imports in November and December stood at 6.42mmt and 7.27mmt, respectively. Accordingly, China’s annualised LNG import capacity utilisation during the reporting period stood at roughly 72 percent, down 15pp from the previous reporting period of November-December. The amount imported during the reporting period also constituted a notable net decrease of 1.00mmt (-8 percent) from the 12.38mmt we recorded during the January-February period of 2022, which was reflective of a relatively weak economic rebound after more than two years of anti-coronavirus measures. China’s economic growth target for 2023 was set at 5 percent this year, the country’s lowest in decades. China’s industrial profits slumped almost 23 percent during the reporting period of January-February, according to government statistics.
Prices
Our calculations based on Chinese customs data indicate an ongoing cooling-off of China’s landed LNG prices during the reporting period, which peaked at US$27.58/mmBtu in January and US$29.01/MMBtu in February. Whilst still high, these not only represented a significant cooldown from prices as high as US$38.80/mmBtu in December, but they also remained below the high-water mark of US$49.32/mmBtu in August 2022.
China’s economic growth target for 2023 was set at 5 percent this year, the country’s lowest in decades. China’s industrial profits slumped almost 23 percent during the reporting period of January-February, according to government statistics. Relatively slow economic recovery put significant pressure on domestic LNG prices and thus maintained a sizeable gap in landed prices, Chinese customs data indicate.
Chinese domestic LNG prices continued to trend lower in January and February from their peak of US$27/mmBtu in March 2022 and a short spike to US$23.63/mmBtu in December 2022. In the current reporting period of January/February, the highest privately quoted domestic price had decreased to US$19.52/mmBtu on 10 January before sliding to around US$18.30/mmBtu on 1 February. Accordingly, the average Chinese domestic LNG price during the reporting period remained below that of the preceding month of December. The current reporting period’s average stood at US$17.58/mmBtu compared to US$20.03/mmBtu for December.
Meanwhile, the average domestic price indicated by the National Bureau of Statistics (CNBS) stood at US$18.60/mmBtu for February (the most recent available full-month dataset by the CNBS), which represents a decrease of US$0.90/mmBtu (-5 percent) from US$19.50/mmBtu in January.
North China
LNG demand decreased considerably in the north of China during the reporting period, with offtakes down by 1.08mmt (-21 percent) from 5.09mmt in the two months of November-December to 4.01mmt for the reporting period of January-February. The largest shares of LNG influx into the region during the reporting period took place via the Caofeidian LNG terminal. However, the sum of L NG imports of 4.01mmt in northern China for the period of January-February 2023 was still significantly behind its equivalent of 5.08mmt i n 2022, down by 1.07mmt (-21 percent).
China’s North again led by Caofeidian LNG
Leading the roster of northern terminals by volumes imported, Caofeidian LNG took in 1.23mmt during the reporting period of January-February. This constituted a c onsiderable decrease in offtakes by 0.29mmt ( -19 percent) compared to the previous two-month period. Imports consisted predominantly of eight Qatari cargoes from Ras Laffan LNG amounting to 0.89mmt. Australia’s Gorgon LNG, Malaysia LNG, Sabine Pass LNG in the United States and two e-exports from Rotterdam and Zeebrugge s upplied the remaining five cargoes amounting to 0.34mmt.
Tianjin LNG
Imports at Tianjin LNG amounted to 0.76mmt, down 0.36mmt (-32 percent) from 1.12mmt in November-December, according to our data. These imports were led by Qatar’s Ras Laffan LNG complex, which supplied 0.19mmt via three cargoes. Additionally, two s hipments amounting to 0.09mmt were supplied by Queensland Curtis- and NWS LNG. The remaining seven cargoes stemmed from Corpus Christi LNG in the United States, Das Island, Bonny Island, Malaysia LNG, Bontang in Indonesia, Egypt’s Idku LNG and one re-export from Zeebrugge in Belgium.
Tianjin - Nangang LNG
Tianjin - Nangang LNG, meanwhile, had offtakes amounting to 0.84mmt over the reporting period compared to 1.10mmt in November-December. The terminal thus saw an import decrease of 0.26mmt (-24 percent). Cargoes comprised 11 shipments from Australia Pacific LNG amounting to 0.75mmt in addition to one of 0.09mmt from Ras Laffan in Qatar.
Qingdao LNG and Dalian LNG
The remaining two northern terminals – Qingdao LNG and Dalian LNG – imported 0.89mmt and 0.29mmt over the reporting period, respectively, which in the case of Qingdao LNG stemmed predominantly from Australia Pacific LNG with 0.38mmt. Six cargoes totalling 0.51mmt from Papua New Guinea, Qatar and the United States completed imports at Qingdao.
January-February supply to the Dalian terminal came mainly from Australia’s Queensland Curtis LNG, Gorgon LNG and Australia Pacific LNG, which together accounted for 0.23mmt. Moreover, we recorded a delivery of 0.06mmt from Oman LNG.
East China
At the time of writing, demand in East China was dominated by the wider Shanghai area, where Jiangsu LNG imported 1.18mmt during the reporting period. This placed the terminal third among China’s leading terminals in January-February. Accordingly, it operated at well-above nameplate capacity. However, overall LNG demand in East China had remained broadly steady period-on-period at 3.30mmt in January-February compared to the 3.35mmt we recorded in November- December.
Wider Shanghai area
The remaining wider Shanghai area – comprising Qidong LNG, Shanghai LNG, the metropolis’ peak-shaving facility as well as Yancheng LNG– imported a total of 1.35mmt o ver the reporting period, up 0.46mmt (52 p ercent) from the 0.89mmt recorded in November-December on account of higher o fftakes at Qidong LNG and Yancheng LNG. Pinghu LNG, however, did not see a c onventional LNG import during the reporting period. The Shanghai LNG terminal took in 1.03mmt and thereby boosted imports by 0.32mmt (45 percent) period-on-period.
Zhejiang & Zhoushan LNG
At the neighbouring terminals Zhejiang and Zhoushan LNG, imports amounted to 0.69mmt and 0.08mmt, respectively. Zhejiang L NG’s offtakes had thus decreased by 0.12mmt (-15 percent) compared to November- December. Meanwhile, Zhoushan LNG also slashed imports period-on-period by 0.20mmt ( -71 percent) to 0.08mmt from 0.28mmt. LNG to Zhejiang LNG was mainly supplied by Australia, with five cargoes totalling 0.37mmt s temming Queensland Curtis LNG, Gladstone LNG and Gorgon LNG. Qatar’s Ras Laffan LNG c omplex also supplied 0.27mmt via three cargoes alongside a shipment of 0.08mmt from Sabine Pass LNG in the United States. Zhoushan’s single import of 0.08mmt also came from Ras Laffan in Qatar. Zhoushan is o ne of the few Chinese LNG import terminals not controlled by one of the state-owned petrochemical giants PetroChina, Sinopec and CNOOC.
South China
Regional imports in South China – where L NG demand is primarily determined by the southern industrial clusters surrounding S henzhen – saw the most significant regional d emand decrease during the reporting period of January-February, our data showed. The region’s imports amounted to 4.07mmt over the reporting period, which meant they were d own by 1.18mmt (-22 percent) from the 5.25mmt recorded in November-December.
Shenzhen terminals
South China’s imports were still led by Shenzhen’s active terminals – Guangdong Dapeng and Shenzhen Diefu LNG. Dongguan LNG and the adjacent peak-shaving facility, on the other hand, continued their market absences. The region’s most prominent terminal – Guangdong Dapeng LNG (GDLNG) – saw offtakes of 1.35mmt, as usual placing it first among China’s terminals. At 1.35mmt, however, the terminal had decreased its January-February imports drastically by 0.53mmt (-28 percent) from 1.88mmt during the previous two-month period. Guangdong Dapeng LNG’s average capacity utilisation stood at 119 percent over the reporting period, which resulted in neighbouring Shenzhen Diefu LNG importing 0.68mmt and pegging its terminal utilisation at 102 percent, broadly unchanged period-on-period. Shenzhen Diefu usually steps in when GDLNG’s throughput requirements are stretched beyond capacity.
Zhuhai and Jieyang LNG
Zhuhai LNG decreased offtakes by 0.32mmt (-48 percent) to 0.34mmt over the reporting period from 0.66mmt the previous period, which pegged overall capacity utilisation at 61 percent. Unlike during previous reporting periods, the roster of Zhuhai’s LNG suppliers had narrowed and only comprised Ras Laffan in Qatar and Sakhalin-2 LNG in Russia. Previously, the terminal’s imports also regularly came from Malaysia, Australia, the United States, Equatorial Guinea, Nigeria and Malaysia. Ordinarily, Zhuhai is supplied mainly by Australia with a smaller proportion coming from Qatar.
Alongside Zhuhai, Jieyang LNG also saw a substantial decrease in imports during the January-February period. Full-period offtakes were down by 0.17mmt (-28 percent) to 0.44mmt in January-February from 0.61mmt in November-December. Accordingly, Jieyang LNG saw capacity utilisation of 63 percent over the reporting period compared to 83 percent in November-December. 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 line with the overall demand decrease in the South China region, Fujian LNG saw offtakes retreat in January-February. At 0.36mmt, imports were down 0.24mmt (-40 percent) from the 0.60mmt recorded during the previous period. The terminal’s capacity utilisation, therefore, stood at only 34 percent.
Beihai LNG also saw lower demand over the reporting period. Offtakes at the terminal had decreased by 0.05mmt (-12 percent) to 0.36mmt from 0.41mmt in November-December. The terminals’ annualised capacity utilisation stood at 72 percent for the reporting period.
Hainan Island
The remaining two regional LNG terminals – Hainan LNG and the Hainan Transfer Station on Hainan Island –saw a considerable demand increase due to higher activity at the Hainan LNG terminal. Whilst the Transfer Station saw its two-month offtake retreat by 50 percent to 0.02mmt period-on-period, Hainan LNG increased imports by 0.18mmt (53 percent) to 0.52mmt in January-February from 0.34mmt in November-December. The terminal continued to take in supplies from international sources, chiefly from Malaysia but also from the United States, Qatar, Papua New Guinea, Indonesia and Russia. Previously, supply to the terminal was limited to mostly re-exports from Beihai LNG. These re-exports stopped in August last year, our data indicate. LNG capacity utilisation on Hainan Island over the reporting period was thus 104 percent.
