Chinese Demand Lifts LNG
Further confirmation on Friday of the impact China’s surging demand for LNG is having on prices and the market.
We told you last week how China’s changed its coal use policy because of soaring gas prices and a looming shortage.
On Friday we learned from China’s November trade data that its appetite for gas, including LNG continues to grow rapidly.
So it’s no wonder LNG prices have firmed in the past six months and while global oil prices, especially for Brent crude have been firm in recent weeks (China’s oil imports in November were the second highest on record).
In fact Asian LNG prices hit three year on Thursday of $US10.05 per million British Thermal Units after China’s natural gas imports in November hit a record as domestic demand surged.
November gas arrivals, including pipeline imports and liquefied natural gas (LNG) shipments, hit 6.55 million tonnes, topping the previous record of 6.1 million tonnes last December, data from the General Administration of Customs showed.
In the 11 months to November gas hit 60.7 million tonnes and on track to hit a record. They are up 26.7% year to date.
China imported 26.06 million tonnes of LNG in 2016, as compared to 19.63 million in 2015. Imports this year are up 50% from 2016.
A government campaign to replace coal and coal fired electricity production with gas has pushed domestic LNG prices to record highs, with some industrial and commercial users facing shortages or unable to afford the high cost.
Chinese gas energy companies like Petro China and CNOOC are boosting purchases on the spot market, while China National Petroleum Corp warned last Thursday warning of potential shortages.
Crude oil imports rose to 37.04 million tonnes in November, or 9.01 million barrels per day (bpd), up from 7.3 million bpd the previous month, and were the second-highest level in history.
Year-to-date crude imports were up 12% to 385.98 million tonnes or 8.44 million bpd in the 11 months to November.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.