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China Resumes Spot LNG Buying as Prices Hit Three Year Low

Prime Highlights

  • China has switched to spot buying of liquefied natural gas (LNG) as global prices are at a three-year low.
  • The move is China’s strategic comeback into LNG markets for cheaper and more flexible energy sources.

Key Facts

  • Shenzhen Energy and China Gas Holdings are two of the companies that are presently actively attempting to buy LNG cargoes.
  • China’s activity in its spot market had decreased during recent years because of high global prices and sluggish demand.

Key Background:

The world’s biggest LNG purchaser, China, is getting back into the spot LNG market after staying away from it for some time. The move comes after the decline in global spot prices of LNG to its lowest level since 2021. Chinese energy firms such as Shenzhen Energy Group and China Gas Holdings Ltd. currently are requesting more than one spot cargo to be delivered over the next few months.

This is a stark reversal from earlier years, when top spot prices, combined with softening domestic consumption of gas, were to the advantage of Chinese buyers on long-term contracts. The current low-price situation is offering importers an opportunity to capture seasonal demand, stock up, and boost supply elasticity without the weight of long-term commitment.

China’s return to the spot market is also in its larger interests of enhancing energy security and economic competitiveness. By availing lower prices, Chinese firms are able to manage cost pressures and squeeze best value from their LNG portfolios with a combination of long-term contracts, domestic supply, and short-term purchases.

Aside from its increasing spot market volatility, China has also improved its LNG infrastructure and supply diversity. It has freshly signed long-term contracts with major producers such as Qatar, and even launched yuan-settled LNG trades, evincing that it seeks to re-shape the global energy trade norms. All these amount to a strategic, multi-faceted approach—trading short-run flexibility for long-run supply security—in pursuit of increasing energy demand amidst global market turbulence.

As LNG becomes even more crucial to China’s energy mix—and especially to helping to transition from coal—its role in global gas markets must become even more predominant. The return to buying spot LNG speaks of opportunism and strategy on the part of Beijing.

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