LNG: Chinese LNG Re-Exports Picked Up in 2023

Chinese LNG re-export activity has picked up this year and is likely to grow through this winter, amid global volatility and arbitrage opportunities according to ICIS analyst Fei Xu.

• China is likely to have re-exported 14 LNG cargoes in January-October 2023, compared with eight cargoes during the same period last year, according to ICIS’s LNG Edge trade flows.
• China LNG re-exports will eventually increase terminal utilization and flexibility in balancing Chinese demand and the wider Asia region, Xu wrote.
• Chinese re-exports surged when lucrative arbitrage opportunities emerged in 2022 and re-exports continue to remain profitable this winter, as the ICIS EAX, the North Asia spot index is estimated to hover around $16/MMbtu, whereas the estimated average term LNG cost into China would be $10 to $12/MMbtu. ICIS arbitrage calculator suggests that re-selling an LTC cargo to the Asian markets remains profitable at the Yangpu terminal in China, with margins varying from $1.5/MMbtu to $4/MMbtu.
• Thailand presents ample potential for achieving the highest profit margin, closely trailed by Singapore and Taiwan, Xu added.