China's LNG Imports Hit Record High, Expected to Surpass Japan as Largest Importer

(Photo by Bloomberg)

[Asia Economy Reporter Yujin Cho] In September 2018, when the US-China trade dispute was at its peak, China imposed retaliatory tariffs on US liquefied natural gas (LNG) and completely halted imports. However, this year, China has significantly increased its LNG imports from the United States.

On the 2nd (local time), the Wall Street Journal (WSJ) cited data from the US Energy Information Administration (EIA), reporting that US LNG exports to China in August reached 51.7 billion ft³, tripling the volume from the same month last year and marking a record high on a monthly basis. This accounts for 17% of the total US LNG exports.

WSJ analyzed that amid the global energy crisis, China is rapidly increasing its imports of US LNG. Kieran Rowe, head of LNG price reporting at S&P Global Platts, stated, "In the past 30 days, the volume of new long-term contracts for US LNG imports by China has increased by about 20%."

As the energy crisis deepened, China took extreme measures such as halting factory operations and cutting power in some cities. With China aiming to reduce carbon emissions and restrain coal usage, a severe power shortage occurred, leading to increased dependence on LNG.

In this situation, China’s substantial increase in LNG imports for power generation and heating has intensified the global energy crisis.

China, a major LNG consumer, is expected to surpass Japan this year to become the world's largest LNG importer. The share of LNG in China’s total energy consumption expanded from 3% in 2009 to 8% last year.

WSJ pointed out that the recent surge in China’s US LNG imports contrasts sharply with the situation several years ago when China effectively cut off imports by imposing retaliatory tariffs on US LNG in September 2018 during the height of the US-China trade dispute.

The sharp rise in China’s LNG demand has benefited LNG exporters listed on the US stock market, such as Cheniere Energy, whose stock price has surged about 80% this year alone.

LNG companies like Tellurian and NextDecade, despite having at least seven years remaining before their planned facilities begin LNG production, have also seen their stock prices jump approximately 70-80% recently, buoyed by market optimism.