In the summer of 2024 (June to September), China's imports of pipeline natural gas and liquefied natural gas (LNG) are expected to grow by 10.5% and 2.9% year-on-year, respectively, while domestic gas production is forecasted to increase by 5%. Although upstream costs are decreasing, the recovery of industrial demand remains tepid, presenting challenges for China to attain double-digit growth in its natural gas consumption. During the summer season (April to September) of 2024, China's demand for natural gas is anticipated to increase by 6.7% YoY, with the largest growth to be seen in the transportation sector.
Key Highlights:
· The growth rate of China's pipeline gas imports is expected to reach 10.5% this summer, outpacing that of domestic gas production and LNG imports.
· In 2023, the average price of imported LNG dropped by nearly 20% YoY, leading to a substantial 12.6% increase in LNG imports – a rate surpassing both domestic gas production and pipeline gas imports. With this price advantage, the cumulative sales of LNG-powered heavy-duty trucks surged more than threefold.
2024: Pipeline gas imports to grow 10.5% in summer
In the summer of 2024, China's pipeline gas imports are estimated to grow by 10.5% as compared with last summer, with a surge in supplies from Russia. This growth rate surpasses that of domestic gas production, projected at 5% YoY, and LNG imports. LNG import volume is expected to be 36.4 million tonnes, showing the slowest growth compared to pipeline gas imports and domestic production.
Source: Bloomberg, GL Consulting
On the demand side, natural gas consumption is projected to increase by 6.7% YoY to 194.9 billion cbm. The transportation sector will see the largest growth, attributed to the cost-effectiveness of natural gas-powered commercial vehicles. Meanwhile, the expansion of gas-fired power generation capacity and falling fuel prices will drive rapid growth in the gas demand for power generation. However, industrial gas demand will continue to be dampened by the downturn in the real estate sector.
2023: LNG imports surged by 12.6% on significant price drops
China's LNG imports rose significantly by 12.6% in 2023 owing to a nearly 20% plunge in the average import cost. The domestic gas production grew by 5.8%, retaining a YoY increase of around 10 billion cbm for the seventh consecutive year. Pipeline gas imports went up by 6.2%, with a rapid growth in imports through the China-Russia East Route pipeline.
The price advantage of LNG led to a 306% YoY increase in sales of LNG-powered heavy-duty trucks in 2023.
On the demand side, China's natural gas apparent consumption resumed positive growth of 7.6% in 2023, thanks to the reduced gas costs and the Chinese economic recovery. The growth was mainly contributed by the industrial and commercial sector as well as the transportation sector.
Source: GL Consulting
Source: GL Consulting
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Edited by Navy Liu: liuchuanjun@mysteel.com