Unipec, the oil and gas trading arm of China’s Sinopec Corp has awarded fewer-than-planned cargoes in a recent tender to sell up to 45 cargoes of liquefied natural gas for 2022 deliveries, three traders said, dispelling the bearish sentiment that had been fuelled by the rare sell tender.
Earlier this month, Sinopec issued the tender of the super-chilled fuel to take advantage of high Asian spot prices, according to traders who were invited to bid.
Under the tender, Sinopec offered two to five cargoes each month between February and October on a delivered ex-ship basis.
“The awards were about five to seven out of 45 cargoes, they were very picky about prices,” one European trader said.
Chinese and Asian buyers – who used to compete for LNG shipments in a tight market- have recently stayed away from the spot market due to higher prices and ample inventories, sending LNG prices down amid tepid demand.
The high number of cargoes initially sent bearish signals to the market but the limited number of awarded cargoes meant bearish sentiment no longer exists.
“The small number of cargoes awarded possibly means that the cargoes they offered do not have that kind of flexibility buyers asked for. But Sinopec seemed quite sure that these are the redundant supplies for China’s off-peak seasons, as they’re among the best informed guys of the domestic Chinese market,” a Singapore-based trader said.
Another Singapore-based trader said the winners included Total, Glencore, BP, Shell and Chevron and that awards were at JKM prices plus 10 cents or more.
Sinopec declined to comment on the tender results, but a company representative said that Unipec global LNG purchases and sales “are primarily (aimed) to serve domestic demand, balance off excessive supplies and swap delivery slots to boost the firm’s profitability.”
“It’s hard to predict the domestic and international market this year amid an array of factors, it added.
Source: Reuters (Reporting by Marwa Rashad in London and Chen Aizhu in Singapore; Editing by Paul Simao)
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