LNG DEMAND FORECAST: China

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

China’s import demand for September is forecast at 5.2m tonnes, up 469,000 tonnes from the previous forecast for the same month.

Chinese LNG imports are expected to flatten in the coming two months before a big increase in winter.

China continued to post strong imports in August, reaching almost 6m tonnes. The robust recovery in the industrial and residential gas consumption since April, has supported this growth. ICIS had forecast that 5.2m tonnes would be imported in August.

The months September and October are traditionally months of terminal maintenance and typhoon season in northwest and southwest China. Despite a flattening import trend in the coming two months, ICIS forecasts that the country’s LNG import will continue a steady increase toward winter and reach a total of 68.7m tonnes this year.

Gas demand in the upcoming months will be driven by an acceleration in coal-to-gas switching projects, which have to be completed by 1 January 2021 to meet a deadline set by the central government. An underground storage injection plan is ongoing until mid-November, while a subsidy initiative for gas-fired power plants is also helping to boost gas demand. Meanwhile, cheaper spot LNG imports should continue to be favoured over piped gas imports.

ICIS is closely monitoring the impact of the newly formed national pipeline company, and the commissioning of the following regional pipelines; the Wencang-Qionghai-Sanya pipe and the Yuedong terminal output line. Both are planned to be operational by the end of October and have the potential to significantly increase terminal import volumes.