China's LNG Demand Recovery Capped by Higher Gas Supplies

Gas consumption in China is rebounding this year due to the economic recovery and lower prices, but rising domestic production and higher Russian pipeline supplies will cap growth in LNG imports according to Wood Mackenzie.

• “Stronger-than-expected Chinese LNG demand is unlikely to lead to a repeat of the chaos seen in 2022”. They see the base case for prices is a range of $15-20/mmbtu this year. Global competition for LNG will increase with the market “delicately balanced” resulting in potential upside limited to 25$/mmbtu.
• The base-case scenario shows China’s LNG imports in 2023 are 7.4m tons (10 bcm) higher than a year ago at 71m tons (97 bcm).
• Their high-growth scenario shows China’s LNG demand up to 78m tons in 2023 but still lower than the 80m tons imported in 2021.
• The JKM front month contract has fallen from a high of 35.7$/mmbtu in December down to 12.64$/mmbtu due to low northern hemisphere demand over the winter.