SINGAPORE : China's imports of liquefied natural gas are on track to post their first major decline this year, as high prices and weak manufacturing due to COVID-19 lockdowns crimp demand for the super-chilled fuel.
Even for shipments arriving in July, industrial consumers are not placing orders, a Chinese trader said. "Business is terrible," said Li, who owns a 10-trailer fleet to distribute the fuel. Factories have been running"severely below capacity for nearly half a year", as companies reduced output during environmental checks by the authorities and for pollution curbs around February's Beijing Olympics, followed by the COVID lockdowns, Li said.
China has been a major driver of LNG demand since 2017 as Beijing orchestrated an aggressive switch from coal to gas to cut pollution. But while spot LNG prices in Asia are down by nearly half since December, they remain twice China's state-regulated wholesale natural gas rates. So dominant state importers like Sinopec and PetroChina are expected to minimise spot purchases and rely more on slightly cheaper longer-term deals to pare back losses, traders said.
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