"Breakneck LNG Demand Surge In China Is History"

From OilPrice:

The world’s main liquefied natural gas (LNG) demand growth market, China, will continue to be the single largest source of LNG demand globally in 2019.

However, the breakneck demand surge of the past two years is expected to slow down this year as China is determined to avoid severe shortages by boosting pipeline connectivity, building more storage and import terminals, and raising domestic natural gas production.

To be sure, LNG demand in China will still grow, just at a slower pace than it did in 2017 and 2018, analysts say.

In the 2017/2018 winter season, China gobbled up spot cargoes to meet soaring natural gas demand in freezing temperatures, upending the LNG market, which was thought to be on the verge of oversupply just a year ago.

The Chinese coal-to-gas switch policy for millions of households backfired with severe gas shortages last winter, lifting domestic Chinese LNG prices to more than US$20/mmBtu and driving Asian spot LNG prices up.

This winter season, China’s authorities have been determined to avoid another natural gas supply crunch. And they are handling supplies much better than past winter—domestic natural gas production is rising, state energy giants are boosting gas pipeline infrastructure and connectivity, and the coal-to-gas switch is more measured and moderate, taking into account expectations of demand.

This winter, Asian LNG spot prices fell last week for a fifth consecutive week amid above-average temperatures and ample supply. Major Asian buyers—especially China—had stockpiled gas well ahead of the winter. Milder winter weather in some parts of Asia and high stockpiles mean that there is currently little appetite for spot cargoes....MORE