Home ›› 28 May 2022 ›› Asia Biz
China’s imports of liquefied natural gas (LNG) are on track to post their first major decline this year, as high prices and weak manufacturing due to Covid-19 lockdowns crimp demand for the super-chilled fuel.
China became the world’s top LNG buyer last year but surrendered the top spot back to Japan in the first four months of 2022 as imports sank 18per cent from a year earlier, Refinitiv data shows.
Gas use has fallen further this month as a Covid resurgence caused extended lockdowns across several manufacturing hubs, portending a potentially steep drop for the year, industry sources told Reuters. Even for shipments arriving in July, industrial consumers are not placing orders, a Chinese trader said.
LNG imports will likely fall as much as 19per cent this year - by 1 to 15 million tonnes - in what would be the first sizeable drop since China began importing the gas in 2006, according to forecasts by S&P Global Commodity Insights, Wood Mackenzie and SIA Energy.
‘Business is Terrible’
Li Ruipeng, a gas retailer in the northern industrial city of Tangshan, said his clients - gas refuelling stations, steel mills and zinc-coating plants - are buying half the volume of a year ago.
“Business is terrible,” said Li, who owns a 10-trailer fleet to distribute the fuel. Factories have been running “severely below capacity for nearly half a year”, as companies reduced output during environmental checks by the authorities and for pollution curbs around February’s Beijing Olympics, followed by the Covid lockdowns, Li said.
“High prices are another killer as many of my clients can’t possibly pass on the cost when their business orders shrink.” While China’s natural gas supply is up and demand is down, global prices remain high, given global inflation, especially for fuels, Russia’s invasion of Ukraine and other uncertainties.
China has been a major driver of LNG demand since 2017 as Beijing orchestrated an aggressive switch from coal to gas to cut pollution.
