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China gas and power month in brief: gas reforms keep rolling out while coal faces headwinds

28 February 2017

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28 February 2017

China gas and power month in brief: gas reforms keep rolling out while coal faces headwinds

Report summary

The plummets in power and gas demand in January could be misleading. They are more down to the timing of the Chinese New Year in 2017 compared with last year, than reflections of market fundamentals. LNG imports remained strong in January, growing by 39% year-on-year over a 13% decline in pipeline imports. We expect LNG prices to continue to rise, as evidenced by CNOOC's price uplift in Fujian province, but piloting of gas pricing in Hubei and regulatory reforms in Shandong can help to shore up gas demand. Elsewhere, China took a firm line on coal-fired capacity cuts and warned wind-power investors of growing risks in curtailments across northern provinces. The overcapacity issue is forcing power producers to prepare for financial hardship looming on the horizon. Policing compliance remains the linchpin.

Executive summary
Markets
- Weak winter demand continued into January
- An earlier Chinese New Year distorted power demand growth
Policy
- Shandong releases policy to encourage direct on-site LNG supply
- Hubei pioneers gas-pricing regulation
- China takes firm line on coal-fired power capacity cuts
- Wind curtailment set to remain despite the brake on capacity build
Corporate activity
- Fujian improves CNOOC LNG sales pricing mechanism
- China power giants prepare for looming financial hardship
Smog watch
- New inspections, same old findings

Tables and charts

This report includes 6 images and tables including:

China gas and power month in brief: gas reforms keep rolling out while coal faces headwinds: Image 1
Monthly gas demand
Monthly LNG demand

Monthly power demand
China gas and power month in brief: gas reforms keep rolling out while coal faces headwinds: Image 5
Beijing AQI

What's included

This report contains:

February 2017 dashboard.xls

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China gas and power month in brief: gas reforms keep rolling out while coal faces headwinds

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China gas and power month in brief: gas reforms keep rolling out while coal faces headwinds

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