(Bloomberg) -- China is set to post a record drop in liquefied natural gas imports this year, which will return Japan to the top spot as the world’s biggest buyer of the seaborne fuel, according to Wood Mackenzie Ltd.
The research firm expects cargoes to fall 14% to 69 million tons in 2022, only the second decline since China began imports in 2006. The reasons for LNG’s fall from favor are many and varied: a subdued economy, rising international prices, government support for clean coal, a warmer-than-usual winter, and growth in the use of renewable energy. Higher domestic gas production and more supply from pipelines have also reduced shipments.
But it’s the economic slowdown and virus-related curbs on activity that are probably most telling, says Capital Economics, which forecasts a similar drop in annual imports of LNG, even as it expects volumes to pick up somewhat in later months of the year.
Those remain the key factors hobbling Chinese demand across an array of commodities, with crude oil, coal and iron ore all potentially joining natural gas in showing declines in import this year.
Events Today
(All times Beijing unless shown otherwise.)
- BHP quarterly production report, 08:30 Sydney
- SMM’s International Copper Summit, Yantai, China, day 1
Today’s Chart
Blast furnace utilization rates in China’s steel hub of Tangshan have fallen to the lowest in four months. The steep slide comes amid warnings that output cuts are necessary to tackle pinched profit margins. Mills have built up stockpiles that have struggled to find takers as businesses were disrupted by lockdowns. The industry also needs to contend with the recent wave of consumer mortgage boycotts that are threatening demand prospects.
On The Wire
China’s economic outlook for the second half of this year will be determined by the government’s shaky control over coronavirus outbreaks and the property market. Early signs look negative.
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The Week Ahead
Wednesday, July 20
- Vale quarterly production report
- China sets monthly 1 and 5-year loan prime rates, 09:15
- China’s 3rd batch of June trade data, including country breakdowns for energy and commodities
- Fourth Future Energy Convention in Beijing, day 1
- SMM’s International Aluminum Summit, Suzhou, day 1
- SMM’s International Copper Summit, Yantai, day 2
Thursday, July 21
- Bloomberg China economic survey for July, 10:00
- Fourth Future Energy Convention in Beijing, day 2
- SMM’s International Aluminum Summit, Suzhou, day 2
- USDA weekly crop export sales, 08:30 EST
Friday, July 22
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventory, ~15:30
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