Chinese domestic trader Guanghui Energy issued a strip tender on Feb. 6 aiming to purchase 12 LNG cargoes with one delivery scheduled monthly from April 2024 to March 2025.
Sources familiar with the matter said that the tender was to close on Feb. 7 at 3 pm Beijing time.
The buy tender would be on a JKM linked basis, sources said.
"It could be a good time to gauge market conditions for pricing through a buy tender," one Chinese trader said.
Market players said the truck LNG price in China has continued to decline, with an average price of around Yuan 4,100/mt as of Feb. 7, marking a decrease of approximately 15% compared with the average price in 2023. Additionally, specific regional prices have dipped below Yuan 3,600/mt due to factory closures and reduced production during the festive season, sources said.
Another trader said that the tender is expected to be awarded at discounted levels, citing the example of Kansai's recent buy tender being awarded at discounts.
Japan's Kansai Electrics issued a buy tender on Jan. 23 for 12 cargoes with delivery from April 2024 to February 2025. Several traders said that the tender was partially awarded with discounts against the JKM FMA.
China's state-owned CNOOC also issued a strip tender Jan. 31, seeking multiple cargoes for March to May 2024. According to market sources, three or more cargoes were awarded for April and May at slight discounts to the JKM FMA.
The latest drop in spot Asian LNG prices to below $9.5/MMBtu prior to the Lunar New Year holiday period has incentivized importers to tap the spot market, with buyers saying they are on the sidelines waiting for further price declines. Platts, part of S&P Global Commodity Insights, assessed the March JKM at $9.356/MMBtu Feb. 7, down by 4.9% in a week.
"Importers are trying to capitalize on the softening JKM prices to negotiate better discounts, as many buyers are still aiming for lower bidding prices, especially with the decline in domestic LNG prices this week," said a source working with one China-based company.
"The demand outlook for the coming months remains uncertain, leaning towards a bearish sentiment," said a Chinese buyer, adding that although there is potential for demand recovery driven by industrial production, the extent of any growth remains uncertain.
Guanghui Energy operates the 5 million mt/year Qidong LNG receiving terminal in eastern China's Jiangsu province. The company sold around 6.6 Bcm or 4.6 million mt of natural gas in 2022, up 45% on the year, according to its annual report published in April. (February 7, 2024)
CHINA - LNG - SUPPLIES - IMPORTS - EXPORTS