Asian liquefied natural gas importers, including China and India, snapped up liquefied natural gas (LNG) cargoes this week after spot prices of the super-chilled fuel briefly slipped to their lowest levels in seven months, traders said.
The break in the benchmark Japan-Korea-Marker (JKM) price to under $10 per million British thermal units (mmBtu) on Tuesday – a key psychological threshold level for buyers – drew a flurry of buying from emerging nations as Europe’s demand remains weak this winter despite the lack of Russian gas supply. LNG-AS
Chinese importers secured 5-6 LNG cargoes this week, most of which were bought for under $10/mmBtu, two industry sources said.
A Singapore-based trader said Indian companies including Indian Oil Corp, Bharat Petroleum Corp and Torrent Power had also traded this week, while tenders issued by GAIL and Gujarat State Petroleum Corp will close on Friday.
“The market is busy these days. China is buying a lot, India also,” he said.
“Because of the price drop, people are interested in buying.”
The Electricity Generating Authority of Thailand (EGAT) is also seeking one LNG cargo for delivery in March.
The JKM price for February delivery dipped to $9.809 per mmBtu on Jan. 9, according to S&P Global Commodity Insights, its lowest level since June 13 when it was assessed at $9.744/mmBtu.
The market has since strengthened to $10.133/mmBtu as of Jan. 11, which analysts and traders said may cool demand again.
“I don’t expect this buying interest to continue for long, particularly for Chinese importers, since most tend to become less active around Chinese New Year holiday, and they will also have reduced demand after that due to shoulder-month season,” said Rystad Energy analyst Masanori Odaka, referring to China’s Lunar New Year holiday in mid-February this year.
“On the other hand, India tends to have heightened gas demand for the second quarter of each year, so there may be opportunistic buying from Indian LNG importers … The remainder of winter will largely determine whether China will continue buying after Chinese New Year.”
Source: Reuters (Reporting by Emily Chow; Editing by Florence Tan and Elaine Hardcastle)