Global demand for liquefied natural gas improved in China in recent weeks. Chinese buyers have been more active in the market. The resumption of investor confidence marked a turnaround from February results there the country's top importers incurred delay due to cancelled shipments caused by declining demand.
According to Yahoo! Finance, the global health crisis caused significant delays in the demand for liquefied natural gas (LNG) in China. However, buyers in Southeast Asia and Europe became more active in the last two weeks despite the global lockdown imposed by the government in the country.
Indian importers that aided China in meeting global LNG supply took advantage of cheaper cargo rates. It declared a force majeure on its prompt shipments caused by the lockdowns. This allowed companies to defray liabilities for the delays incurred during the crisis.
However, China's gas consumption has resumed and along with an economic rebound of its manufacturing activity in March. Factories have started to ramp up their operations after governmental restrictions resulted in factory shutdowns earlier in 2020.
According to a Singapore-based analyst at energy consultant FGE Edmund Siau, rising demand also caused small companies in the market to improve their storage capacities. They have been emerging as they took advantage of the low spot prices,
Vessel-tracking data from Kpler showed that China imported 1.26 million tons of LNG in the last week of March alone, the first time that global demand improved in over a month. Hence, small buying increase in the smaller utilities sector.
According to BloombergNEF analyst Lujia Cao, the small buyers took advantage of cheaper prices while the bigger companies were the ones who struggles top consume all of the contracted supply of smaller companies.
Deals within the industry included the purchase of several cargoes by ENN Energy Holdings Ltd. that was completed in March with Guangdong Yudean Natural Gas Co. The deal marked deliveries to last until 2020.Shandong Zhongnuo closed its tender of three shipments for May to October, while Yudean, on a separate tender, imposed the same mandate on its May to June shipment.
State-owned China National Offshore Oil Corp., on the other hand, has been inactive from the market. The reason being bloated inventories have adversely affected its operations. According to traders within the industry, Sinopec Group has more room for storage tanks used by spot cargoes. It was also revealed that the company is seeking cargoes for April and May deliveries as well.
