LNG DEMAND FORECAST: China

SHANGHAI (ICIS)–The rolling 24-month LNG demand forecast for China has been updated.

LNG imports to China are forecast to reach 5.2m tonnes in August, up 2% year on year compared to the same month last year.

As the first major economy to rebound from coronavirus restrictions, China has recorded strong growth in LNG imports since April, with the outlook for GDP growth now pointing to 2% growth in 2020.

However, the trend expected to slow as the country enters the autumn season. A weak global economy is also expected to weigh on exports and investment, limiting Chinese gas consumption.

Low spot LNG prices, and subsidies in the residential and petrochemicals sectors, should continue to stimulate domestic demand.

On the supply side, a new domestic gas production target has been announced at 180.5bcm, though we are not confident this can be achieved.

The target will require a deep production cut, and though China National Petroleum Corp (CNPC) controls most onshore production areas, significant pushback is expected from the different municipal levels.

However, the policy of lowering domestic gas production does provide some room for LNG imports to grow in the coming months.

There are several factors to look out for in the coming months: Domestic oversupply, storage and pipeline infrastructure development on a regional level, and the pace at which PipeChina – the new national midstream pipe company – can take over existing trunklines from the NOCs. ICIS continues to update our demand forecast as the situation develops.