Gas market analysts expect that Chinese LNG importers will skip purchasing binge in the spot market ahead of winter as storage spaces are nearly maxed out from earlier bargain buying. Buying appetite for spot cargoes is expected to weaken further as seaborne and pipeline gas deliveries which were deferred during the peak of the COVID-19 outbreak are expected to arrive in the coming months.
There is also a concern that demand will not recover enough to digest high stockpiles in September and October while pipeline gas imports resume. Some of China’s major LNG importers have reduced spot purchases due to high inventory pressure. Traders said that PetroChina, Sinopec, and CNOOC have largely completed purchases for the winter.
China emerged from the coronavirus lockdown earlier than other economies. Factory activity accelerated in a time when LNG prices fell to historic lows. In the second quarter of 2020, China’s LNG imports surged 20% year-on-year that resulted in a faster build in the country’s storage tanks. The high stock levels curbed China’s LNG import growth. It received just above 5 million tons of LNG last month, the lowest since it was under lockdown measures in March.
