China overtook South Korea to become the world’s second-largest liquefied natural gas (LNG) importer in 2017, figures from S&P Global Platts showed Thursday, highlighting the country’s ballooning demand for the fuel as it ramps up efforts to stem pollution.
China bought a total of 37.89 million metric tons (41.77 tons) of LNG from overseas last year, an increase of more than 48% from 2016, according to data compiled by the international energy and commodity information provider. Purchases in December alone reached 5.05 million metric tons, the highest-ever monthly volume since the country started importing LNG in 2006.
Japan remained the largest LNG importer in the world last year with purchases of 81.61 million metric tons, up 2.3% from a year ago. South Korea fell to third, with its inbound shipments rising nearly 11% year-on-year to 36.51 million metric tons.
China’s surging demand is partly why the LNG spot price has continuously grown in recent months. It hit a three-year high of $11.2 per million British thermal units (Btu) on Wednesday, more than double the 2017 low point of $5.4 in March, according to Platts JKM, the LNG benchmark price assessment in Asia. A Btu measures the amount of heat required to raise the temperature of 1 pound of water by 1 degree Fahrenheit.
“Robust demand from China was one of the important factors behind the recent Asian LNG price rally,” said Marc Howson, senior managing analyst of LNG at S&P Global Platts. He also cited expectations of greater Japanese consumption due to cold weather across North Asia and buyers’ limited choice of suppliers as reasons for the price increases.
China’s use of natural gas spiked last year amid a government campaign to replace coal-fueled heating systems with natural gas- and electricity-powered ones, with a focus on both residences and industrial buildings across the country’s smoggy north.