The LNG consumption in South China's Guangdong province is projected to have dropped 4.71% YoY to 3.76 billion cubic meters in 2023, primarily due to the significant decrease in LNG demand in the first quarter, although there was an improvement in the second and third quarters, according to OilChem.
2022-2023 Guangdong LNG Consumption
Source: OilChem
The weak demand in the first quarter was attributed to the production suspention of downstream enterprises during the Spring Festival which fell in January, as well as the limited demand growth in view of higher imported LNG prices in Febraury when downstream enteprises resumed the production.
Besides, the poor recovery of industrial demand, the small proportion of LNG consumption from gas stations and the sufficient PNG supply amid more attractive prices than LNG, also contributed to the decline in LNG consumption in 2023.
According to OilChem's survey, industrial demand could account for 40% of the total LNG demand in Guangdong province, mainly from glass factories and ceramic factories. However, LNG consumption from these factories did not increase largely in 2023, because they held high inventories for a long time with low production enthusiasm due to limited demand growth both at home and abroad, on the backdrop of geopolitical factors and poor development of the domestic real estate industry.
In addition, the PNG supply was adequate this winter in Guangdong and the prices stood at Yuan 3.3-4.2/cum, which was more attractive than LNG prices at Yuan 4.1-4.6/cum, making LNG comsumption in the fourth quarter falling slightly from the third quarter.
Looking ahead, Guangdong continues to accelerate the construction of natural gas power generation units, with some power plants coming on stream in 2023. As a result, with relatively suitable prices, LNG comsuption, as a supplementary feed for power plants, may have a significant increment in the summer of 2024.
Written by Sunny Fang, fss@oilchem.net
Edited by Aggie Hu, huchenying@mysteel.com