China shuns expensive LNG imports despite higher summer demand

Despite growing electricity demand during summer months, China has no plans to increase imports of costly liquefied natural gas (LNG). The Asian country is using cheaper alternatives like coal and piped natural gas. The price of the latter is declining due to a global oil supply glut. Bloomberg notes their prices remain closely correlated.

Traders anticipating an LNG trading rebound had monitored China’s eastern coastal regions for a summer demand spike that never materialized. According to ENN Group, one of China’s largest importers, another factor behind subdued gas consumption this summer has been sluggish industrial demand.

BloombergNEF estimates show China’s LNG imports will reach about 5.6 million tons in July—up from June but below last year’s level. Gergely Molnar of the International Energy Agency (IEA) predicts weak gas imports will persist in China through the second half of the year. However, Molnar notes the decline will be less sharp than in the first half of the year due to winter stockpiling.