China becomes world’s second-largest LNG importer

https://www.rt.com/business/415263-china-largest-lng-importer/

China has this year become the world’s second-largest LNG importer after Japan, analysis of shipping data from Reuters Eikon has revealed.

Asia’s number-one economy imported around 38 million tons of liquefied natural gas this year, an over 50-percent annual increase. To compare, Japan’s LNG imports this year stood at 83.5 million tons, while South Korea’s were about 37 million tons.

According to Reuters, this development will give a major spur to Asia’s spot market because Chinese LNG buyers are much more in favor of short-term contracts than long-term deals, unlike buyers in Japan and South Korea. In fact, China’s emergence as a large LNG buyer is changing the market in more than one way.

The emergence of a spot market is one of these ways, which undermines the established tradition of long-term contracts for LNG supplies with prices linked to oil benchmarks. The benefits of long-term supply contracts are reduced price volatility and security of supply – both Japan and South Korea are entirely dependent on imports to satisfy their demand for gas.

China coming onto the LNG scene as the government makes an effort to reduce coal consumption in line with environmental goals, has disrupted the structure of the market and has also caused a price spike that LNG exporters have been only too happy to witness and take advantage of while it lasts.

The reason it may not last is that a lot of new LNG export capacity is coming online and it seems that it will exceed demand growth, with various analysts and authorities predicting an LNG glut, including the International Energy Agency, which in October said it expected the global LNG market to remain oversupplied until the mid-2020s. However, the IEA noted in its forecast that Chinese demand could tighten the market earlier than that.

———–

soon to be number 1?

“Asia’s number-one economy imported around 38 million tons of liquefied natural gas this year, an over 50-percent annual increase. To compare, Japan’s LNG imports this year stood at 83.5 million tons, while South Korea’s were about 37 million tons.”

why?

“China coming onto the LNG scene as the government makes an effort to reduce coal consumption in line with environmental goals, has disrupted the structure of the market and has also caused a price spike that LNG exporters have been only too happy to witness and take advantage of while it lasts.”

401

~ by seeker401 on January 15, 2018.

2 Responses to “China becomes world’s second-largest LNG importer”

  1. I remember the political fight over coal, West Virginia, U.S. was the battleground during the presidential elections. So far I have not heard of coal being set free to conduct proper business. On the other hand, natural gas shale drilling is huge in our area. New pipelines and wells put in all over the place, huge natural gas stations, and even train tracks laid in some areas to get to the pipe stations to export it out of the region. At first the green religion in the area and at the state level went after the natural gas boom (due to better technology to extract the gas), but that all but disappeared. Looks like coal is out and natural gas is in.

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