A rapid increase in LNG prices has prompted China - the world’s biggest buyer - to cut back on purchases and even resell some supplies, providing relief to rival importers.
The 30 day moving average of Chinese LNG imports has slumped over the last few weeks, and is now 12% below the four year average for this time of year, according to ship tracking data compiled by Bloomberg.
Imports had been above the seasonal norm for most of the year.
The Asian LNG benchmark price is around $14.50 per MMBtu, roughly 30% higher than at the start of the year, which is too expensive to be economically viable to import spot shipments into China’s cheaper domestic market.
China also isn’t in dire need of additional LNG, as import terminals - particularly those located in the south of the country - have high inventories, due to declining demand, as customers chose cheaper alternatives, according to traders.
The government had not given any firm orders to buy more, they added.
Some Chinese LNG buyers are reselling shipments to take advantage of more attractive prices overseas.
For example, state-owned CNOOC is offering to sell a shipment for February from an Australian supplier, while traders said PetroChina had sold some cargoes in the last month.
This could help boost supplies for other buyers in other parts of Asia, and further afield.
In addition, Russian pipeline deliveries were set to fall further at the end of this year, as the Ukraine transit deal expires, likely increasing demand for LNG in Europe, Bloomberg said.
