China's buying power in the commodity
market is legendary the country consumes
much of the world's copper cotton and
corn to name just a few
soon we might add to the list natural
gas
Beijing's long-held concern about
security of supply for its energy made
the country dependent upon its coal and
oil reserves today it is shifting away
from highly polluting coal towards
natural gas although this year its coal
consumption has bounced back it's not
clear that that can last a recent
academic study revealed that for those
living in the more coal dependent North
air pollution shortens the lives by
three years as compared to those who
live in the southern regions of China
while the country has plans to expand
the amount of gas that imports via
pipelines in the short term
China has chosen to step up its Seabourn
imports of liquid natural gas up to
October this year
LNG inflow has jumped 48 percent on
average that follows a 1/4 rise the year
before transporting this fuel requires
specialized tankers and there are not
enough of them glut of LNG tankers
booked a couple of years ago has
vanished between 2012 and 2014 the
number of orders placed more than
doubled to 66 this year that number has
dropped at just 8 now these ships
require around 30 months to build spot
daily rental rates have thus risen since
April of last year LNG tanker rates have
roughly doubled and they are still
historically low these prices could more
than double again before touching the
highs of five years ago not only have
China's imports picked up but the US has
begun to export its cheap gas a notable
price arbitrage of around $6 per million
British thermal units exists between the
US and Asian trading hubs listed LNG
tanker specialists have long waited for
this day companies such as gas log and
gholar LNG have operating companies as
well as high
master limited partnerships listed in
the US dinah gas also has an MLP listed
there another in Norway's flex LNG
awaits delivery of its vessels while
there is no shortage of LNG supply to
come that gas will require more vessels
to transport it LNG tanker operators are
now in a sweet spot able to fuel China's
needs