LNG FOR CHINA DOWN

BLOOMBERG - Mar 26, 2025 - China is rapidly cutting back on its seaborne gas imports, threatening growth forecasts that have driven multibillion-dollar spending on projects across the globe.

Chinese purchases of liquefied natural gas will fall this year for the first time since 2022, according to BloombergNEF, which had earlier foreseen record-high deliveries. Although the slowdown in demand is providing near-term relief for European buyers competing for the same supply, a sustained drop in consumption risks a glut later this decade, when more projects come online.

BNEF has lowered its projection for Chinese LNG imports this year to 74.89 million tons, said analyst Daniela Li. That’s about 11 million tons less than its previous forecast, and below the amount imported in 2024. It also follows a steep drop in imports over the first two months of the year to a seven-year low.

For the revision, Li cited milder weather in the first quarter, an expansion in overland supply from Kazakhstan, the impact of US tariffs on the economy, and low stockpiles in Europe.

LNG suppliers have invested billions in new export projects on the assumption that China, the world’s top buyer, will underpin demand growth for decades. Companies like Shell Plc are betting that trading the super-chilled fuel will drive profits for years to come. But doubts are mounting over China’s role in raising consumption.

Chinese demand has become vulnerable because of cheaper alternatives, from coal and renewables, to gas produced domestically or piped overland from Russia and central Asia. Slower economic growth and pressure to cut energy costs have also taken the edge off China’s appetite for the fuel, which is generally pricier because of processing and shipping costs from plants as far afield as Qatar and the US.

Lower Forecasts

Other firms are also revising their forecasts lower for China. ICIS expects imports this year at 81 million tons, 2 million tons less than an earlier projection.

Chinese buyers are diverting shipments of contracted LNG to Europe to take advantage of higher prices there, said Yuanda Wang, an analyst at the consultancy. Europe has imported 35% of the world’s LNG so far this year, up from an average of 25% in 2024, according to Morgan Stanley.

The market in China should rebound in coming months if a hot summer boosts air-conditioning needs and electricity demand, or saps hydropower output, said Wang. Other supporting factors include China’s embrace of the fuel as an alternative for trucks — although that requires LNG priced at a 30% discount to diesel, according to BNEF estimates.

And China’s overall consumption of natural gas is still expected to rise, although more of the fuel is being produced at home as part of Beijing’s push on energy security. Output last year rose 6.2% to a record and majors like Sinopec are increasingly turning to gas to drive their upstream businesses.

On the Wire

Most Chinese coal miners might suffer losses if the benchmark Qinhuangdao coal price were to fall below 400 yuan per ton, according to Bloomberg Intelligence.

Fifteen companies, primarily in materials and utilities, account for 55% of the CSI 300 Index’s 2023 greenhouse-gas emissions, and their climate efforts are critical to China’s decarbonization road map, BI said.

Contemporary Amperex Technology Co. Ltd. has received China’s approval to proceed with a potentially blockbuster share sale in Hong Kong.

-----