China replaced South Korea as the world’s second-largest LNG importer in 2017, and again surprised the market in 2018 with a counter-seasonal conundrum of summer shortage and winter oversupply. But as the energy-consuming giant of Asia continues to grow its LNG infrastructure, and industry players focus on achieving stable and reliable supply, the spot market may be exposed to fewer shocks originating from China in the future. The trading frenzy seen in 2017 started to cool early 2018, visible in a steep backwardation structure in Asia LNG spot prices rolling from winter into spring. The day-on-day price drop was at $1.25/MMBtu, when the Platts JKM assessment rolled into the new front month of March from February on January 16, 2018, compared to a mere $0.21/MMBtu drop same day in 2019. The Chinese were at the forefront of the market between October 2017-February 2018, procuring winter spot amid tight global supply and colder-than-expected weather in North Asia. The irreversible part of their demand arose from a politically led coal-to-gas switch in 2017 that resulted in the replacement of coal-fired boilers in more than four million households. The additional upside volatility was attributed to several cold-snaps sweeping across the country and its… continue reading
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Source: CTRM Center