China’s imports of LNG may gain momentum with the signing of new sales and purchase agreements (SPAs) due to start in 2023, alongside new infrastructure coming on line the same year. This is despite a tumultuous year for the country as it battled repeated Covid-19 resurgences, which capped demand for LNG.
But some Covid-19 controls in the country are gradually being relaxed, raising hopes that downstream demand in China could soon rebound, although the full extent of this potential rebound is unclear, market participants said.
China is expected to lose its crown to Japan as the top LNG importer in 2022. Japan’s LNG imports totalled 49.2 million ton between January-August 2022. In comparison, China imported 40.9 million ton and South Korea imported 29.9 million ton over the same period. China, previously the top importer, imported a total of 79.3 million ton in 2021 when it overtook Japan for the very first time, by 5 million ton.
High and volatile prices have dampened Chinese demand for spot LNG, with the country turning to lower-priced pipeline gas imports and domestically produced gas instead, as well as alternatives such as coal, LPG and other fuels. Continued Covid-19-related lockdowns in China have also kept gas demand suppressed because of a slump in industrial demand.
The number of tenders that China issued in 2022 has also dwindled. The country has issued less than five tenders so far in 2022, far fewer than India, which has issued an average of about four tenders each month up to November 2022. This is significant as India has similarly been hit with weaker gas demand as a result of high spot prices.