China is hoovering up liquefied natural gas (LNG) cargoes worldwide, pushing spot prices for the fuel above those for oil-indexed cargoes, as energy providers scramble to avoid a looming winter supply crunch.
China has moved millions of households from burning dirty coal to natural gas this year, pushing up import demand.
Most Asian LNG supplies are delivered under long-term contracts with prices linked to crude oil.
But with the upcoming winter heating season, Chinese utilities have turned to the spot market in desperation to cover themselves in order to meet surging demand, chartering tankers from as far away as Norway.
"We expect [China's national oil and gas majors] CNOOC, PetroChina and Sinopec to buy 30 percent more [LNG] on the spot market in the coming three months compared with last year, to help boost supplies," said Jiang Jin, gas analyst at JLC Energy.
"LNG terminals are running at full capacity," she noted.
A similar short-term supply crunch late last year boosted spot Asian LNG prices by more than 80 in the last four months of the year and pushed China's December 2016 imports to a record 3.7 million tons, nearly double the 2016 average of just 2 million tons a month.
With millions more households having moved to gas since then, last year's record is expected to be smashed this year.
Asian spot LNG prices have soared by more than two-thirds since May to $9 per million British thermal units (mmBtu), above oil-linked prices of around $8 per mmBtu.
"I'm fairly certain China will break a new import record very soon and that spot prices will break through $10," a trader with a major commodity merchant said, declining to be named as he is not allowed to talk publicly about pricing.
Unlike coal or oil, of which China is the world's biggest importer, the country is only the number three buyer of LNG behind South Korea and Japan.
