Cold weather, industrial demand lift China LNG imports

China's LNG imports rose sharply on the year in October, boosted by colder weather and stronger industrial activity.

China's LNG imports rose to 5.02mn t last month from 4.04mn t a year earlier, data from China's General Administration of Customs (GAC) show. Year-on-year growth of 25.4pc was 2020's second-strongest after June, when imports jumped by 29.2pc to 5.79mn t.

Strong LNG imports in recent months may have bolstered LNG inventories and gas stocks in underground storage sites, which were 5bn m³ up on the year, the country's principal economic planning body, the NDRC, said.

Pipeline gas imports edged up to 2.51mn t from 2.48mn t. Deliveries had fallen on the year every month since March, with the exception of August, when they rose by 8pc.

Lower-than-average temperatures in October may have boosted LNG demand. Overnight lows held around 1°C below the seasonal norm in Beijing and were 0.8°C below the average in Hohhot, in China's Inner Mongolia region. But minimum temperatures are forecast at close to the long-term average until early January.

Residential demand for gas is usually weak in October ahead of the start of the heating season in November across most of northern China. But cold weather resulted in heating demand climbing early this winter, the NDRC said last week.

Colder weather may have encouraged firms to increase spot LNG purchases, despite importers having already absorbed large spot volumes earlier in the year, when prices were at record lows.

China's Zhejiang Energy issued a tender in September to buy one spot cargo for delivery on 26-30 October to the 3mn t/yr Zhoushan LNG terminal.

Chinese LNG demand was stronger on the year despite the 1-8 October Golden Week holiday, which typically sees slower industrial activity and reduced industrial gas demand. But industrial output rose by 6.9pc on the year last month, up from a rise of 4.7pc in October 2019, data from the national bureau of statistics show. Industrial output grew by only 1.2pc in January-September, checked by sharp falls in January and February.

The economy is on course to grow in 2020, premier Li Keqiang said in September — the only major economy likely to do so. GDP increased by 4.9pc from a year earlier in the third quarter, according to the national statistics bureau. That compares with growth of 3.2pc in April-June and a 6.8pc contraction in the first quarter.

By Livia Gallarati

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