Not even a heatwave in China can make up for the slowing industrial economy cooling demand for energy in the country. Coal prices are falling and LNG imports are slowing as manufacturers slow output. Reuters’s Muyu Xu, Emily Chow, and Chen Aizhu report:
An ongoing heatwave in China is boosting power demand for cooling, but tepid industrial demand and record high coal inventories are keeping prices at two-year lows and limiting spot liquefied natural gas (LNG) imports.
Analysts do not see coal prices rising or spot LNG imports picking up anytime soon as a sluggish domestic recovery from COVID-19 curbs and shrinking exports dampen power demand from manufacturers, which account for about two-thirds of electricity use in the world’s No. 2 economy.
“China has gotten used to using less LNG,” said Alex Siow, lead Asia gas and LNG analyst at pricing agency ICIS.
The outlook will hurt coal and LNG exporters, as China is the world’s biggest coal importer and vies with Japan as the top LNG buyer. The industrial and power sectors account for more than half of the country’s gas demand.
“Weak industrial demand is the root cause, with key gas consumers like ceramics and glass makers operating at low rates as they face poor external demand,” said a senior Chinese trader, who declined to be named as he is not authorised to speak to media.
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