Highlights

  • Seasonal uplifts in Northeast Asian gas demand will be weak in Q4
  • Northeast Asia's LNG demand will continue to fall on an annual basis for the rest of 2015
  • Delays in Australian LNG exports will do little to reduce the glut this winter
  • Spot LNG prices in Asia are hovering around $7.4/MMBtu

Economic overview

China’s quarterly GDP growth slowed in Q3, supporting expectations that the country’s annual growth will weaken this year.

China’s economy grew by 6.9% on an annual basis in Q3, down from 7% in Q2, according to the latest data from the OECD. The country’s economy will grow by 6.8% this year and 6.3% in 2016, according to the International Monetary Fund – a drop from 7.3% in 2014.

Annual GDP growth by quarter

  Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
China 7.3% 7.3% 7.0% 7.0% 6.9%
Australia 2.8% 2.5% 2.5% 2.0% 2.0%*
Japan -1.4% -0.8% -0.8% 1.0% 1.1%
South Korea 3.3% 2.7% 2.4% 2.2% 2.7%
Indonesia 4.9% 4.9% 4.8% 4.7% 4.7%
Source: OECD. *Estimate.

China’s industrial output and its manufacturing and property sectors are struggling. Beijing plans to increase spending on infrastructure projects to reverse this trend, and the country’s central bank could cut interest rates in the next few months. Nevertheless, China’s annual GDP growth rate is unlikely to increase next year. Although the lower growth could limit the expansion of the country’s gas sector, high prices have been constraining the market and the government’s recent tariff cut may be enough to counteract the effect of the economic slowdown. 

South Korea’s GDP growth improved in Q3. The country’s economy expanded by 2.7% year on year, up from 2.2% in Q2, supported by increases in consumption and public spending. However, the economy will grow more slowly in 2015 than in 2014. The country’s gas market has struggled this year, and any increase in consumption in 2016 is expected to be limited.