Wednesday, August 26, 2020

"China May Skip Winter LNG Buying Binge"

From Bloomberg via Rigzone, August 25:

Don’t expect an LNG buying binge ahead of winter from the world’s fastest growing consumer of the fuel.
China will likely pull back on spot purchases of liquefied natural gas before the peak demand season as a flurry of earlier bargain buying nearly maxed out storage space. Meanwhile, seaborne and pipeline deliveries deferred during the worst of the Covid-19 pandemic are expected to finally arrive, further weakening its appetite for supplies from the open market.

“There is a big question about whether demand will recover enough in September and October to digest the almost-full gas storage while pipeline imports resume,” said Miaoru Huang, a Beijing-based analyst with Wood Mackenzie Ltd. “There will be no room for more injections to underground storage by early September.”

Some of China’s biggest buyers have lowered spot purchasing since July as they struggle with higher inventories, according to traders at the state companies and their counterparties, who asked not to be identified as the information isn’t public. PetroChina Co., Sinopec and China National Offshore Oil Corp. have already largely finished buying for the winter, they said. The three companies didn’t respond to requests for comment.

It’s been a roller-coaster year for natural gas into China, the world’s biggest buyer when measuring combined LNG and pipeline imports. State firms declared force majeure on some purchases from February as coronavirus lockdowns smothered demand. Later, as China was among the first countries to emerge from the pandemic, its economic rebound coincided with a crash in LNG prices to record lows. It then feasted on the cheap fuel, boosting imports by 20% year-on-year in the second quarter, compared with just 2.9% in the first....