In July, Chinese LNG imports were up y/y for the second straight month by 0.09 Mt (5%) to 1.92 Mt. Over H1 15, demand was disappointing, but increased appetite for LNG over the past two months has meant LNG imports are now only down by around 0.2 Mt (-2%) y/y in the year to date.
As LNG demand has improved, pipeline gas imports have fallen, with July takes down y/y by 0.22 Mt (-11%). The narrowing and marginal reversal of the average price differential between LNG (7.5 $/mmbtu) and pipes (7.6 $/mmbtu), and greater contract volumes coming on-line explains the shifting preferences. Total gas imports into China were lower y/y by 0.14 Mt (-4%), as China experienced mild summer weather in July, with CDDs down by 8% y/y and by 10% on the five-year average. Lagged Chinese numbers indicate gas demand was up y/y by 0.3 bcm (2%) in June-a solid increase that is surprising given the generally mild summer weather. Over H1 15, gas demand in China was up modestly by around 1.1 bcm (1.2%).
Domestic production was up y/y by 0.85 bcm (3%) in July at 10.1 bcm. This healthy level of production growth, coupled with a smaller decline in imports implies that July likely saw another good month of y/y gas demand growth in the country or a build of LNG stocks.
In terms of supply sources for imports:
- Pipeline imports from Turkmenistan decreased y/y by 0.22 Mt (-14%). Imports from Kazakhstan were also down y/y. Imports from Myanmar continue to grow, and were up y/y by 0.06 Mt (41%).
- LNG imports from Qatar increased for the first time in seven months, up y/y by 0.09 Mt (21%). Imports from Malaysia declined by 0.21 Mt (-74%), while Australian takes soared by 0.39 Mt (85%) as contract cargoes from Queensland Curtis began arriving. Imports from Indonesia increased by 0.05 Mt (20%) y/y.
In July, total power generation in China increased by 4.2 TWh (0.8%) y/y. Thermal generation was largely unchanged y/y, while hydro generation decreased by 3.4 TWh (-3%) y/y, with lower m/m reservoir levels potentially constraining availability. Nuclear generation was up by 4.9 TWh (41%) and other renewables was up by 3 TWh, both due to new capacity additions. Over the first seven months of 2015, China has added 52 GW of generating plants, with 29 GW of thermal, 6 GW of hydro, and 18 GW from other sources (nuclear, solar and other renewables).