Asian Gas Market Finds Solace as Buyers Seek to Resell Excess

November 16, 2023: In a move that could alleviate supply concerns and ease price pressures, major gas buyers in North Asia are seeking to resell liquefied natural gas (LNG) shipments. This decision stems from high inventories and a desire to optimize portfolios.

The reselling activity is spearheaded by Chinese importers, including PetroChina Co., who offer to sell LNG cargoes scheduled for delivery in December. This follows the resale of at least five shipments for November by Chinese firms. Japanese importers are also joining the trend, offering to sell LNG shipments.

The move is partly driven by efforts to manage inventory levels, which have reached their highest point since May. With storage tanks nearing capacity, gas buyers want to offload excess supply to prevent further price declines.

The reselling activity indicates that Asia is well-stocked for the upcoming winter and unlikely to compete fiercely with Europe for gas shipments. This could bring much-needed relief to the global gas market, which has been on edge due to concerns about colder-than-expected weather and potential supply disruptions.

North Asia spot LNG prices for December hover around $16.5 per million British thermal units (mmBtu), a level considered too high for Chinese firms to import and sell into the domestic market. The reselling activity could further depress prices, providing some respite for consumers.

Overall, the reselling of LNG shipments by Asian buyers suggests a shift in market dynamics, with supply concerns gradually easing and prices finding some stability. This could pave the way for a more balanced gas market in the coming months.