In February, Chinese LNG imports were up y/y by 0.16 Mt (11%) to 1.66 Mt. This followed January, when imports were lower by 1.55 Mt (-59%); those low intakes would have seen stocks in Chinese LNG storage tanks being used up. As a result, over the first two months of the year, LNG imports are down by an average 1.4 Mt (-33%) y/y.
In February, pipeline gas imports were up y/y by 0.87 Mt (52%). As a result, total gas imports into China were higher y/y by 1 Mt (33%). The increase in gas imports came even as China experienced another month of mild weather in February, with HDDs down by 11% y/y, and 9% below the five-year average. Chinese gas demand numbers for February have yet to be published, but in January, demand was up by 1.8 bcm y/y (11%). In terms of supply sources:
- Chinese domestic gas production grew y/y by 0.41 bcm (4%) in January and 70 mcm (1%) in February.
- Pipeline imports from Turkmenistan increased again y/y by 0.72 Mt (48%), while imports from Kazakhstan declined y/y. Imports from Myanmar increased y/y by 0.17 Mt (144%).
- LNG imports from Qatar fell by 0.31 Mt (-42%) y/y, while Imports from Malaysia, Indonesia and Australia increased y/y by 0.06 Mt (25%), 0.04 Mt (23%) and 0.13 Mt (51%) respectively.
While demand was up in January, we expect most of that was due to the build out of capacity in the urban gas sector. As such, while total heating demand was likely to be down, the share of gas in that sector is likely to be up. The same cannot be said for power sector gas demand, which looks like it is struggling for traction.
Over the first two months of 2015, total power generation in China increased by 40 TWh (5%) y/y. So far in 2015, thermal generation is up by 11 GW (2%) y/y, while hydro is up by 13 TWh (14%) and nuclear is up by 6 TWh (34%), with the latter up y/y owing to capacity additions in 2014. Last year, China added 104 GW of generating plants, with 47 GW thermal, 22 GW hydro and 34 GW both nuclear and renewables-10 GW solar, 5 GW nuclear and the rest (19 GW) wind. Those capacity additions, in a power market now increasing by around 5% y/y, have meant thermal power is struggling to expand. Within that, gas-fired power generation is struggling most, as it is still at a premium to coal-fired generation.