High prices and weak manufacturing due to pandemic-related lockdowns have reduced China’s liquefied natural gas (LNG) imports this year, which are likely to post an overall decline for the first time.
Even for shipments arriving in July, industrial consumers are not placing orders, a Chinese trader said, as gas use has fallen further this month due to the Covid-19 resurgence.
China became the world’s top LNG buyer last year but surrendered the top spot back to Japan in the first four months of 2022 as imports sank 18% from a year earlier, Refinitiv data shows.
LNG imports are likely to fall as much as 19% this year – by up to 15 million tonnes – in what would be the first sizeable drop since China began importing the gas in 2006, according to forecasts by S&P Global Commodity Insights, Wood Mackenzie and SIA Energy.
Li Ruipeng, a gas retailer in the northern industrial city of Tangshan, said his clients – gas refuelling stations, steel mills and zinc-coating plants – are buying half the volume of a year ago.
“Business is terrible,” said Li, who owns a 10-trailer fleet to distribute the fuel. “High prices are another killer as many of my clients can’t possibly pass on the cost when their business orders shrink.”
Factories have been running “severely below capacity for nearly half a year”, Li said as companies reduced output during environmental checks by the authorities and for pollution curbs around February’s Beijing Olympics.
- Reuters, with additional editing by George Russell