China to post record decline in LNG imports as economy slows

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.