Fundamentals

Published at 10:24 29 Sep 2017 by

LNG imports presented a globally mixed picture in August. Across Asia, Chinese demand remained exceptionally strong and South Korean imports posted another month of y/y gains, but Japanese and Indian imports slipped y/y. Countries in the MENA region also imported less LNG in August y/y, while LNG imports in Latin America climbed from a year ago, led by a large increase in Mexican imports. 

Chinese imports were up by a whopping 0.88 Mt (39.7%) y/y during the month. Australian volumes continue to dominate port receipts (up by 37% y/y at 1.52 Mt in August), but Qatari supplies also remained strong, growing by 150% y/y to 0.69 Mt despite Qatari LNG costing more than other import sources at an average of 8.6 $/mmbtu. If temperatures are in line with the seasonal norm this winter, we expect that China will take some 3.6 Mt more LNG y/y this coming winter. That said, a colder-than-normal winter could see a faster stock depletion, adding another 3 Mt to winter demand.

South Korea imported 2.6 Mt of LNG in August, 0.63 Mt more y/y despite weaker demand, with imports once again supported by receipts to non-KOGAS terminals. A 0.13 Mt y/y rise in Qatari takes points to greater demand for spot LNG. Australian deliveries were also stronger y/y, and imports from the US were the highest since US imports began in December 2016. Imports into non-KOGAS terminals are on track to be considerably higher y/y this month, and given that the weather has been warmer than average, cooling demand should boost September gas demand.  

Japan’s LNG imports fell by 6% (0.47 Mt) y/y in August to 7.26 Mt—the largest y/y drop since December 2016—as cooler weather helped curb power generation. A mild start to Q4 17, as currently forecast, should help keep Japanese demand for LNG fairly modest, particularly given the recent restart of the two 0.9 GW Takahama nuclear units and the possible return of the 1.1 GW each Ohi 3 and 4 units.

Indian LNG imports slipped by 0.05 Mt y/y to 1.58 Mt in August, as higher power demand was met by a sharp jump in coal-fired generation rather than gas-powered output. Rising global LNG prices may have led price-sensitive India to turn down spot cargo purchases last month. On the flipside, LNG imports have found some support this month from a boost in gas-fired generation in India due to coal stocks falling to critical lows.

Latin American imports jumped by 0.30 Mt y/y in August, reaching 1.97 Mt according to indicative figures. Strong imports into Mexico were a main driver, as port receipts that were up by a hefty 0.25 Mt (58%) y/y helped offset cross-border pipeline disruptions caused by Hurricane Harvey. Strong power sector gas demand and low domestic production pushed Argentinian LNG imports up by 0.07 Mt y/y to 0.50 Mt. Chilean LNG imports rose by 0.05 Mt y/y in August, to 0.36 Mt, also supported by a rise in gas-fired generation. Brazilian LNG imports were flat y/y at 0.26 Mt despite low hydro generation, as strong gas production limited the country’s appetite for imports.

Countries in MENA imported 1.96 Mt of LNG in August, lower y/y by 0.25 Mt. This was a second consecutive y/y decline and the third month of declines so far in 2017.

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