Some regions in China may face tight gas supplies during peak demand periods this winter, with overall supply and demand finely balanced, but coal supply will be assured, the state planner said on Tuesday.
The comments came as China kicked off its winter heating season in the country’s northern regions in early November, just as a months-long power shortage eases in most parts of the country.
“Amid tight natural gas supply and soaring gas prices globally, China’s natural gas supply and demand will be in a tight balance in general,” Meng Wei, a National Development and Reform (NDRC) spokesperson told a media briefing.
In peak demand hours, some regions may face tight supplies, she said.
Beijing has raced to boost coal output to overcome electricity shortages amid booming post-pandemic demand for power, and is also encouraging a ramp-up in gas production.
The LNG price for December delivery into Northeast Asia [LNG-AS] was at $31.50 per metric million British thermal units (mmBtu) on Friday, up 116% from a year ago.
China’s daily natural gas supply, which includes both imports and domestic output, has risen to more than 1 billion cubic metres since November 7, up about 10% from the same period last year, Meng said.
State-backed oil companies China National Petroleum Corp, Sinopec and CNOOC, as well as PipeChina, drew gas from pipeline inventories and underground storage last week during a bitter cold snap.
“The NDRC will urge domestic gas fields to maximise production … and orderly cuts in gas consumption by non-residential users to ensure household usage,” Meng said.
China’s Gas Demand
China’s natural gas output edged up 0.5% in October from a year ago, statistics bureau data showed. But officials from energy firms expect China’s gas demand to rise about 10% this winter.
The NDRC also said China’s daily coal output continues to grow in November after October production hit a multi-year peak.
Coal inventory at power plants across the country reached 129 million tonnes as of November 14, and is expected to exceed 140 million tonnes by the end of this month.
“With the increase in coal production … coal supply will be assured until next spring,” Meng said.
Spot thermal coal prices with energy value of 5,500 kcal stand at below 900 yuan ($141) a tonne at mines and at about 1,095 yuan a tonne at northern ports after a slew of government interventions, the NDRC said.
Spot thermal coal prices rose to as high as 2,500 yuan a tonne in early October.
The most-active Zhengzhou thermal coal futures contract fell 3.2% on Tuesday to 819.4 yuan a tonne.
- Reuters with additional editing by Kevin Hamlin
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