Chinese Importers are Turning into Spot Liquefied Natural Gas Purchase Amid Volatility in Price

Geopolitical conflict between Russia and Ukraine has turned into a broader border tension between these two nations. This tension has started affecting the global future trading, as the market uncertainties has injected high volatility to market prices of different commodities especially LNG. It is observed that Chinese buyers are now opting for spot purchases for Liquefied Natural Gas rather than trading in future, as the contract prices for February and March started escalating on the back of market uncertainties.

Global Liquefied Natural Gas market are still changing inline with European market, as the current market volatility is shaking the global market dynamics too. Conflict between Russia and Ukraine is a matter of concern for global LNG market, as it is threatening the supply chain disruption across Europe via potential risk of sanction on Nord Stream 2. As per market experts, Nord Stream 2 is the most effective way to refill the depleting inventories of LNG in European market, which can pour some ease in global Liquefied Natural Gas prices. Moreover, potential threat of invasion by Russia on Ukraine has already tensed the global market, which has induced buoyancy on TTF (Title Transfer Facility) along with JKM (Japan-Korea Marker).

These market fundamentals have pushed Chinese players to temporarily halt trading futures and prefer spot purchases. As per the recent information, some key players in China are now importing cargoes on spot purchases, as TTF and JKM future are escalating dynamically. Two key players in China Sinopec and CNOOC (China National Offshore Oil Corporation) closed tender of new cargoes due to lower offers, as they are seeking better opportunity amid global supply crunches. However, as per recent reports China has enough cargoes to satisfy countries current need, which is pushing importers to take this wise decision to bid on spot cargoes rather than trade on futures. In addition, zero tolerance policy in China amid resurgence of pandemic cases may hit the overall demand of Liquefied Natural Gas in the country during forthcoming months. Thus, market experts are heard advising Chinese government to revise this policy for Omicron, as it seems to be less fatal than any other previous variants.