China's LNG imports are expected to reach 5.80 million tonnes in June, down 1.66% year on year, data from GACC and OilChem showed. This is the first year-on-year decline in 2024, primarily due to higher imported LNG prices.
Source: GACC, OilChem
Seen above, the import growth over January-May reached 20.02% on year, as the stable imported LNG prices and recovering domestic economy bolstered downstream demand, which lifted the domestic natural gas apparent consumption by 10.80% year-on-year to 179.31 billion cubic meters in the first five months.
However, the imports could not increase as expected in June, because higher imported LNG prices curbed Chinese importers' buying interest.
Source: OilChem
The import profit stood at Yuan 991/t over January-April, but it turned into negative from H2 May and finally came in at Yuan -79/t in June, as the international spot LNG prices were driven up by growing electricity demand as a result of the hot wave in Asia, as well as shrinking supply due to the unexpected plant maintenances overseas.
Source: OilChem
Under rising spot LNG prices, the price spread between China and Northeast Asia was $0.28/mmbtu in May, surging 250% compared to April, and it even increased to $0.30/mmbtu in June. In this case, Chinese upstream enterprises were more willing to resell the cargoes for arbitrage, causing a decline in LNG imports.
LNG Prices vs PNG Prices
|
PNG (Yuan/cubic meter) |
LNG (Yuan/t) |
Spread |
Jan |
6.375 |
5,259 |
-3,666 |
Feb |
6.255 |
4,441 |
-4,316 |
Mar |
3.080 |
4,431 |
119 |
Apr |
3.110 |
4,214 |
-140 |
May |
2.955 |
4,340 |
203 |
Jun |
2.950 |
4,611 |
481 |
Source: OilChem
Note: Spread = LNG Prices – PNG Prices * Yuan 1,400
Moreover, the higher LNG prices enlarged its spread with the PNG prices, and downstream users were more inclined to purchase PNG due to its attractive prices than LNG. It was learned from OilChem that, the PNG transaction prices will continue to decline in July, which will further weigh down the LNG consumption. This also means that China's LNG imports will be possible to drop further in July.
Written by Sunny Fang, fss@oilchem.net
Edited by Aggie Hu, huchenying@mysteel.com