In May, Chinese LNG imports were down y/y by 0.46 Mt (-29%) to 1.12 Mt. This decline followed April, when imports were up y/y by 0.23 Mt (17%) at 1.54 Mt, which we believe was evidence of restocking. Over the first five months of the year, demand for LNG has been disappointing, with LNG imports down by around 0.67 Mt (-8%) y/y.
Pipeline gas imports were lower y/y in May for the first time in 2015 by 0.27 Mt (-13%). As a result, total gas imports into China were lower y/y by 0.72 Mt (-20%). Chinese gas demand was down y/y by 0.7 bcm (-5%) in May. Mild weather in May was not overly supportive of either heating or cooling demand with HDDs down by 5% y/y, and CDDs up by 1% y/y.
Over the January to May period, gas demand in China has been weak, up by only 0.8 bcm (1.1%). Higher priced gas has been uncompetitive against coal, limiting demand for gas from the power sector. While thermal generation increases have been limited by the growth in low carbon capacity (particularly nuclear and hydro), coal plants remain the first choice for generation. In May, total power generation in China increased by 14.6 TWh (3.3%) y/y. Nuclear generation accounted for 3.2 TWh (31%) as capacity expanded, and hydro generation increased by 2.7 TWh (3.6%) on continued strong reservoir levels. This meant thermal generation was up by 4.1 TWh (1.2%) y/y, and most of that increase was met by coal. Over the first five months of 2015, China added 32 GW of generating plants, with 19 GW thermal, 4 GW hydro, 3 GW nuclear and 6 GW from renewables.
Domestic production, which fell y/y by 0.3 bcm (-3%) in April, was largely unchanged y/y in May at 9.9 bcm. Over the first five months, production is up some 2.1% y/y.
In terms of supply sources for imports:
- Pipeline imports from Turkmenistan decreased y/y by 0.14 Mt (-8%), while imports from Kazakhstan increased y/y. Imports from Myanmar increased for the fourth month in a row, up y/y by 0.05 Mt (33%).
- LNG imports from Qatar continued to decline, down y/y by 0.27 Mt (-56%). Imports from Malaysia and Australia declined by 0.07 Mt (-21%) and 0.07 Mt (-22%), respectively. Imports from Indonesia increased by 0.07 Mt (54%) y/y.