Typhoon Butterfly may delay LNG unloading in South China

The first typhoon of the year, Butterfly, has formed in the South China Sea, posing a significant threat to southern China, according to a weather forecast from the country's Central Meteorological Observatory on June 11. This may disrupt LNG unloading schedules in the region, according to market sources.

Butterfly developed at 8:00 am Beijing time on June 11 over the central-western South China Sea, with its center located approximately 165 km southeast of Yongxing Island, Sansha City, Hainan Province. The maximum wind speed of the typhoon was reported at 18 m/s (Force 8) by the CMO.

The storm is forecast to move west-northwestward at speeds of 10 to 15 km/hour while gradually intensifying. It is expected to approach the southern coast of Hainan Island, potentially making landfall as a severe tropical storm or typhoon between early morning and morning on June 13.

Meteorologists warn that after impacting Hainan, Butterfly could make a second landfall along the coast of western Guangdong or Guangxi provinces during the night of June 13.

On June 10, the General Headquarters Office of Guangdong province issued a notice requiring all fishing boats operating in the province's waters to withdraw to designated areas on June 11, and fishing boats in western Guangdong waters to prepare to return to port for shelter, according to state media CCTV.

The storm has raised concerns for shipping logistics, as it may disrupt maritime activities, including the unloading schedules of LNG carriers in the affected regions, market sources said.

Three LNG carriers are scheduled to arrive at ports in southern China between June 11 and June 15. One is expected to reach Chaozhou Huaying terminal on June 11, another at Shenzhen Diefu terminal on June 12, and a third at Hainan Yangpu terminal on June 14, based on shipping data from S&P Global Commodity Insights.

However, a source at an LNG receiving terminal in Guangdong said they haven't received any official notice requiring LNG vessels to leave port for shelter as of June 11 afternoon.

Market sources indicated that the typhoon may lead to a tight supply of local LNG, potentially pushing up the sales price of trucked LNG. However, the impact of the typhoon on the market is expected to be relatively short-term, typically lasting about two to three days.

Currently, the price of trucked LNG sold by terminals in Hainan, Guangdong, and Guangxi provinces is the highest in the country. On June 10, the prices were Yuan 5,375/mt, Yuan 5,054/mt, and Yuan 4,825/mt, respectively, all exceeding the national average of Yuan 4,753/mt, according to data from the Shanghai Petroleum and Natural Gas Exchange.

As LNG supply is ample in the southern regions, market participants do not expect local trucked LNG prices to rise further