China imports record LNG volumes, overtakes Japan for second month
China imported a record high monthly volume of liquefied natural gas (LNG) in December, overtaking Japan as the world’s top importer of the fuel for a second consecutive month, ship tracking data from Refinitiv Eikon showed.
China imported 7.198 million tons of LNG in December, up nearly 16% from November, while Japan shipped in 6.574 million tons last month, up nearly 7% from the previous month, the data showed.
China only slightly overtook Japan’s volumes of LNG imports for the first time in November, but greatly exceeded its neighbour’s volumes in December, according to the data.
Both countries have yet to release official monthly data and shipping data fluctuates. But analysts say this reversal will not last beyond winter.
“I assume the reversal is due mainly to a seasonal boost in LNG demand from China, but the long-term trend of weakening LNG demand in Japan to reflect increasing renewable energies and restarts of more nuclear power plants was also behind,” said Hiroshi Hashimoto, senior analyst, head of gas group at the Institute of Energy Economics, Japan (IEEJ).
While Japan is still the world’s leading LNG importer in terms of annual volumes, China will overtake Japan early this decade, Wood Mackenzie said.
Japan’s energy demand has been falling due to an ageing population and competition from other sources, such as nuclear power, while China’s gas demand has soared because of a government push to move residential and industrial energy users off coal-fired power and heating to natural gas to cut pollution.
“While both Chinese and Japanese gas demand peak during winter, China’s gas demand typically experiences a greater seasonal swing due to its strong gas requirements for heating, particularly with the ongoing coal-to-gas switching in northern China,” said Alicia Wee, LNG analyst at consultancy FGE.
China’s LNG imports in December likely surged because of the arrival of term volumes buyers committed to previously and spot volumes purchased earlier in the year, rather than a sudden rise in domestic demand, traders have said.
Competition from cheaper coal and the ramp-up of gas flows from Russia to China through the new “Power of Siberia” pipeline could also slow the pace of LNG imports this year.
“China will eventually exceed Japan to become the largest LNG importer, yet the inflow of Russian pipeline gas from the Power of Siberia, faster domestic gas ramp up and gas demand creation slowdown have added uncertainty to the timeline,” said Miaoru Huang, a senior manager at Wood Mackenzie.
(Reporting by Jessica Jaganathan; additional reporting by Yuka Obayashi in TOKYO and Chen Aizhu in SINGAPORE; Editing by Clarence Fernandez and Christian Schmollinger)
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