Industry Trend Analysis - Winter, Prices To Drive Short-Term Gas Demand - DEC 2017
BMI View: China ' s natural gas consumption and imports will remain elevated over the coming months, as greater demand for heating during the winter months, coupled with continued policy backing from Beijing spur robust demand. This will exacerbate China's already hefty reliance on gas imports, with LNG ' s favourable prices and ease of delivery handing it an edge over pipe line gas imports over the short term.
China's natural gas consumption is set to see strong seasonal gains over the coming months, as colder temperatures drive greater need for heating. Total gas consumption over the first eight months of 2017 increased 18.0% y-o-y, largely due to Beijing's ongoing efforts to steer the national energy mix towards cleaner energy sources (natural gas, renewables), as part of a broader move to reduce reliance on coal and cut air pollution. China is seeking to boost the share of natural gas in the overall energy mix from 6.0% currently to 10.0% by 2020. The recently held 19th National Party Congress reaffirmed China's commitment to promoting green development, reducing air pollution and implementing more robust regulations to protect the environment.
Gas demand will be further boosted by the government's recent decision to cut benchmark gas prices for non-residential users by CNY100.0 (USD15.0) per thousand cubic meters, effective from October 2017, which will lower gas rates for consumers in the industrial, power generation, transportation and commercial sectors.
|Gas Demand To See Seasonal Uptick Over Winter|
|China - Monthly Natural Gas Consumption, bcm|
|Source: National Sources, BMI|