China’s Smaller LNG Firms Are Buying Again After Price Drop

(Bloomberg) -- One of China’s smaller liquefied natural gas importers procured a shipment from the spot market, heralding a return by the nation’s price-sensitive buyers after the energy crisis halted purchases for about a year-and-a-half.

Beijing Gas bought a shipment for April delivery to China, according to traders with knowledge of the matter. This is the first purchase by a so-called Chinese second-tier importer — firms unaffiliated with the state-owned giants that handle most of the country’s trade — since summer 2021 when the fuel became too costly.

China’s LNG imports slumped about 20% last year after Russia’s invasion of Ukraine upended the market and triggered prices to surge to an all-time high. But prices have plummeted in recent months after milder winter weather and efforts to curb gas consumption have dashed fears of a global fuel shortage. 

Beijing Gas purchased the shipment at the high-$13 per million British thermal units range, the lowest level since summer 2021, said the traders. This is an attractive price for China’s smaller importers, and other firms are scouting the market for deliveries, they added. 

The return of price-sensitive buyers from China to India could help lift Asian LNG demand and taper the recent price decline. It’s symbolic for the industry, which struggled for much of last year with the fuel being too expensive for Asia’s emerging markets.

Still, it’s unclear how much LNG China will procure this year. While the nation’s reopening from Covid Zero is expected to lift gas demand, the government’s modest economic growth target and a lack of major stimulus may curb consumption increases.

Other news from the LNG spot market:

• Gail seeks two LNG cargoes on a DES basis for April and May delivery to India
• Indian Oil purchased an LNG cargo on a DES basis for May 13 delivery to the Dahej terminal at mid- to high-$14/mmbtu
• Adnoc LNG, a unit of Abu Dhabi National Oil Co., offered a cargo for March 26-30 loading

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