China Begins Winter Gas Buying Spree at the Worst Possible Time By Bloomberg
(Bloomberg) — China is escalating its purchases of liquefied for the winter, exacerbating a global supply shortage and leaving less fuel for energy-parched Europe.
China is struggling to secure enough coal to power factories and heat homes this winter, as the world’s second-biggest economy faces a potential energy-crunch scenario similar to the chaos gripping Europe. That’s spurred some of the nation’s energy giants, such as state-owned Sinopec (NYSE:), to dive back into the LNG spot market, seeking shipments of the heating fuel in preparation for when temperatures turn colder.
The post-pandemic recovery has seen natural gas prices rise to their highest seasonal levels in Asia, Europe and Asia. However, there are still supply restrictions. The situation was already strained by China’s insatiable appetite for LNG to fuel its economic rebound — it is poised to overtake Japan as the world’s top importer of the fuel this year.
Many of China’s LNG buyers — among the biggest in the world — had temporarily paused spot procurement when prices began to surge over the summer. Spot rates were expected to fall, and traders bet on that. But that hasn’t happened, and now companies are jumping back into the game.
China Petroleum (NYSE:) & Chemical Corp., known as Sinopec, released a tender on Tuesday seeking to buy at least 11 cargoes of LNG through March, one of the largest winter purchase requests by a Chinese firm in months. Other small importers like Guangzhou Gas Group Co. (Beijing Gas Group Co.) are interested in purchasing shipments from October and November.
Sinopec was last winter’s top Asian buyer, purchasing far more cargoes than were required in tenders. They could be a concern to other buyers in Asia and prompt panic buying by rivals who want to buy supplies to keep prices from rising further.
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