Insight
China smashes LNG growth record (again) in 2018 – what changed
Report summary
• China's LNG imports increased by 15.6 Mt in 2018, breaking the previous world record it set just one year ago. • Chinese buyers have returned to contracting in a significant way, driven by the need to improve short-term supply security and to hedge long-term uncertainty in domestic supply ramp-up. Meanwhile, China became much more active in spot procurement to balance the market. • The high growth was achieved despite higher import costs. Yet, there a mixed mood on gas demand emerged towards the end of 2018. • We expect LNG demand to moderate somewhat in 2019 but will still see demand growth of nearly 9 Mt, ensuring it will continue to shape the global market.
Table of contents
- Highlights
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LNG demand
- China breaks LNG growth record again and overtakes Japan as the largest gas importer
- No repeat of last winter’s gas supply shortages, and China probably overbought LNG for winter
- Policy reaffirms support for long-term gas growth while shifting near-term focus to domestic production and infrastructure
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LNG trade
- Chinese buyers much more active in term contracting than in 2017
- Contracted imports increase but spot purchases double
- The US-China trade war had a limited short-term impact
- LNG shipping
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LNG corporates
- CNOOC slows market share decline
- CNPC/PetroChina returned to contracting in a significant way
- Sinopec ended its overcontracted position and resolved many marketing challenges
- Trucked LNG players tested the water
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LNG infrastructure
- Trucking supports LNG demand growth
- Storage facilities slightly improved, but still not enough
- Northern terminals remained stretched
- Third-party access progressed slowly
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LNG prices
- LNG demand increased despite higher import prices, thanks to the overwhelming priority to secure winter supply and gas pricing reforms
- Nevertheless, gas users started to feel the heat of higher gas prices in winter; concerns over affordability have re-emerged
- The relative competitiveness between LNG and pipeline imports reversed in 2018
- Volatility of trucked LNG prices less dramatic due to improved winter supplies and leaner supply chain
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What to watch in 2019
- The slowdown in demand could deepen
- Pipeline supply potential
- Next step on the reform agenda – will we see a national pipeline company?
Tables and charts
This report includes 15 images and tables including:
- China LNG imports by supply basin
- China LNG imports by supply basin (tonne-miles)
- China LNG imports by average distance travelled
- China LNG imports by supply basin (tonne-miles)
- LNG demand growth in 2018 by region
- Monthly LNG imports 2016-2018
- LNG supply structure 2017-2018
- Spot LNG purchase in 2018
- China LNG imports by supply country/region
- Monthly imports into the three NOCs’ terminals
- Terminal utilisation
- LNG imports value and average import cost
- LNG import cost by supply source 2018
- Delivered costs to coastal markets' city gate: LNG imports versus piped imports
- Comparison of gas prices in Hebei province (northern China)
What's included
This report contains:
