China, the world’s largest importer of liquefied natural gas (LNG), has slowed its spot LNG purchases in recent weeks, as Asian LNG prices hit their highest levels of the year, according to Oilprice.
After a long period of hoarding cheap LNG, China's gas reserves are now estimated to be high enough that importers will reduce their need to buy expensive spot LNG.
China’s recent drop in LNG imports could free up more spot LNG supplies for the European Union (EU), which is burning through its gas reserves at the fastest pace in eight years due to cold weather, weak winds, and supply concerns as a deal to transport gas from Russia through Ukraine is set to expire.
China’s LNG imports in November fell 12% from the four-year average (2020-2023) for the same period, data from Bloomberg show. That’s a significant drop from most previous months in 2024, when China’s LNG imports were typically above average and higher than in 2023.
The main reason for the decline in China’s LNG imports is the sharp increase in spot prices. In recent weeks, LNG prices for January delivery in Northeast Asia have risen to $15/MMBtu, the highest level in 2024. With abundant gas reserves, China is less interested in importing LNG at such high prices.
China has ramped up overall gas imports, including pipeline and LNG, since early 2024 to avoid a supply shortage as the global market enters winter. However, data from China Customs showed that gas imports in November fell 1.4% year-on-year.
In particular, prices have had a major impact on China’s energy imports. While crude oil imports rebounded in November thanks to lower prices and government storage requirements, record-high spot LNG prices led to a decline in natural gas imports.
Notably, some Chinese LNG importers, such as CNOOC and PetroChina, have even resold some LNG cargoes in recent weeks, suggesting that China may have stockpiled enough LNG for the winter.
If the trend continues, Europe could be a big beneficiary. The drop in demand from China would give Europe, which is already facing higher gas and electricity prices, access to more spot LNG supplies.
With gas reserves rapidly depleting due to cold weather and low wind speeds, and the impending end of Russian gas supplies via Ukraine, the European market is under intense pressure. However, if high prices continue to cause China to limit spot LNG purchases, this could help ease concerns about European energy supplies this winter.
