China set to import largest monthly LNG volumes this year in August
China’s gas demand typically increases in winter for heating and is steady during the summer months. But importers may be taking advantage of low spot prices to start stockpiling for winter, traders said
SINGAPORE: China is set to import its largest monthly volumes of liquefied natural gas (LNG) for this year in August, as gas companies take advantage of low spot prices to stockpile ahead of peak winter demand.
The world’s second-largest importer of the super-chilled fuel after Japan looks set to import nearly 6.4 million tonnes this month, nearly 20 per cent more than in July and about 24 per cent up from this time last year, shiptracking data from Refinitiv Eikon showed on Monday.
The biggest jump in supply sources include Russia and Indonesia, the data showed.
China’s gas demand typically increases in winter for heating and is steady during the summer months. But importers may be taking advantage of low spot prices to start stockpiling for winter, traders said.
“Demand in general is healthy and the (import) volumes are higher than last year as prices are much lower,” a Beijing-based gas trader said.
“New terminals are also ramping up output, so that’s also leading to more import volumes.”
Asian LNG spot prices slid to their lowest on record earlier this year and had remained low as the coronavirus pandemic hit gas demand globally, which prompted some buying interest, traders said.
New LNG terminals which started up over the past two years are also ramping up purchases, one of them said. For instance, a completed pipeline connecting ENN Group‘s LNG terminal to a provincial gas grid could see ENN boosting imports, he added.
Cheaper spot LNG prices compared with gas imported via pipelines which are typically on a fixed price, also stoked imports.
Still, with spot LNG prices recently ticking higher due to supply outages, China’s buying spree could be short-lived as inventories fill up, traders added.
The latest round of a trade review between the United States and China which reinforced their commitment to the phase one deal could also see China importing more LNG from the US, analysts from Citi Research said in a note.