China’s liquefied natural gas imports rebounded in May as the world’s largest buyer stepped up purchases ahead of peak summer demand, reversing a months-long decline following disruptions to Middle East supplies.
LNG deliveries to China rose to 4.9 million tons in May, marginally higher than a year ago, according to ship-tracking data compiled by Bloomberg. That’s a stark reversal from the year-on-year contractions seen in previous months. April’s imports fell to the lowest level in eight years as higher prices triggered by the near-closure of the Strait of Hormuz weighed on demand.
The Iran war has choked shipments from the Persian Gulf, which typically accounts for a third of China’s supply. The drop in LNG deliveries from Qatar has been offset by an increase from exporters including Canada, Malaysia, Oman and Russia, according to vessel-tracking data compiled by Bloomberg.
Declining gas inventories and the prospect of a hot summer this year have also compelled companies to buy more from the spot market, according to traders. State-owned Cnooc Ltd. last month bought several cargoes for June delivery while second-tier firm Zhejiang Energy International Ltd. purchased a cargo for July.
China’s increased appetite could tighten global supply as competition between Europe and Asia heats up for spare cargoes ahead of winter restocking requirements. Europe is so far lagging, with its 30-day moving average for deliveries down 13 percent year-over-year, according to the ship-tracking data.
China’s imports have remained soft over the past year as buyers have shied away from expensive LNG to rely on cheaper pipeline gas, as well as other substitutes such as coal and renewables. Still, a surge in domestic prices over the past months has pushing importers to look at importing more of the super-chilled fuel.
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