China LNG Imports Eased M-O-M but still Bullish Y-O-Y in March

According to official data issued by CGAC (China General Administration of Customs), China’s LNG imports reached 3.25 million tons in March, down 19% M-O-M but up 63% Y-O-Y. The month on month import trend showed the impact of the off-peak season, which drove the import volume to crush from January’s historical high at 5.18 million tons rapidly to 3 million tons level. However, propelled by the mandated coal-to-gas policy, the buying from NOCs will be guaranteed to some extent.

Moreover, after the commercial operation of Sinopec’s Tianjin Terminal in February, several new terminals will also be put into use within this year, including the 0.7 Mtpa Shenran Shenzhen Terminal in Q2, 3 Mtpa ENN Zhoushan Terminal in Q3 and the possible 4 Mtpa CNOOC Diefu Terminal. The newly added LNG receiving capacity will reach 6.7-10.7 Mtpa in 2018, and China’s total receiving capacity may reach 58.37-62.37 Mtpa by the end of the year.

By the meantime, LNG receiving terminals are also considered as a crucial part of the emergency stockpile and peak-shaving storage measures at the current stage with the national natural gas reserve capacity is far behind the need of the flourishing consumption. Although the construction cost of the underground gas reserve depot is only one third of the LNG receiving terminal, the storage capacity of the existing terminals will still be relied on.

Therefore, it is expected that China’s LNG import will remain in the fast lane in 2018, and the import volume is estimated to further expand more than 20%. Considering the utilization rate of China’s LNG terminals has reached a high level, the 20% growth rate may be far less than the nearly 50% in 2017, but still will be a significant achievement in 2018.