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Chinese Firms Seek LNG Cargoes, Demand is Strong

August 4, 2021

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Two Chinese firms are seeking liquefied natural gas (LNG) cargoes for delivery over August to November as summer demand in the southern region remains strong and as companies prepare to meet winter demand, industry sources said.

China's Shenzhen Energy is seeking two cargoes for delivery into Yuedong over Aug. 19 to 27 and Oct. 30 to 31, in a tender that closes on Aug. 5, the sources said.

Beijing Gas is also seeking cargoes for delivery over September, October and November in a separate tender that closes on Aug. 4, they added.

Last week, Guangdong Energy bought two cargoes for delivery into Zhuhai and Shenzhen in September, they said.

Demand for LNG from China has been strong despite a surge in spot prices as buyers are stockpiling ahead of winter to prevent being caught in a similar situation as earlier this year, when a shortfall in supply sent spot prices surging to a record high.

Firm demand in southern China, where several regions are experiencing peak summer demand, is also boosting gas demand, the sources said.

China's southwest Yunnan province, also home to several major zinc smelters, has faced a power crunch in recent months due to severe drought and measures to limit pollution.

Spot Asian LNG prices are currently at their highest since January, at above $16 per million British thermal units (mmBtu), sources said.

LNG shipments to China dipped by 7% in July from June, but were higher than usual for this time of the year at about 6.1 million tonnes, shiptracking data from Refinitiv Eikon showed.

Latest customs data showed total natural gas imports, including LNG and piped gas, remained elevated at 10.21 million tonnes in June, compared with 10.32 million tonnes in May.

"General consumption has been strong, but (some) ceramic factories in Guangdong are shutting down production lines due to high fuel cost," a Beijing-based trader said, adding that the firm demand from China may not be sustainable. 

(Reuters reporting by Jessica Jaganathan Editing by Mark Potter)

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