This year, LNG market has already entered into cold winter. The whole industry is depressed, needing all of efforts to rescue market together. LNG market in China has overcapacity.
It is known that Chinese LNG market
is entering into a pathologic cycle gradually since 2013. Explosive growth of capacity in upstream and gradually slowing of demands in downstream, have caused overcapacity in the whole market. In 2013, the situation did not be remitted and even become the main background of Chinese LNG market in the first 8 months of 2014. Oversupply is quite severe.
Data show that both domestic and import LNG have high growth of LNG supply. By the end of June, capacity of domestic LNG program had gone into production and reached 51.3 million cubic meters per day, increasing sharply by 12.85 million cubic meters per day, compared with the end 2013, closing to the whole growth in 2013. For import, data from customs show that import volume in the first 5 months of 2014 was increased by about 21%, compared with the same period of 2013.
Reviewing downstream market, price has increased rapidly since reform of gas price in July of 2013. Economic advantages of LNG are not so obvious, compared with other energies. Downstream investment rate slowed down. At present, price gap between LNG and diesel are being diminished constantly. Although gas is ideal energy for governing environmental pollution, downstream users still use price as mainstay when they choosing energy. Price rising caused by reform of gas price hits the enthusiasm of downstream customers. And that has already become the main reason that downstream development rate of Chinese LNG is slower then investment rate of factories.