Petronet, Reliance squeezed as China sucks up available LNG supplies

A surge in global LNG prices may lead Indian importers to cut their spot market purchases, S&P Global Platts reported. That followed an increase in benchmark prices gathered by Platts to record highs with power generators expected to feel the pain particularly.

Panjiva's data shows the dollar value of imports by India's largest importers had already been in decline with a 32.7% year-over-year drop in total imports in the three months to Oct. 31, 2020. That included a 33.2% drop in shipments linked to Petronet LNG Ltd., the largest importer by value. Shipments linked to Reliance Industries Ltd. fell by a somewhat faster rate of 46.6%, while those linked to Indian Oil Corporation Ltd. fell by a slower 14.6%.

A central challenge for Indian importers is in sourcing spot contracts at a reasonable rate. Much of the surplus has been taken by Chinese importers, according to Platts, including elevated exports from the U.S. The latter has been in part due to the phase 1 trade deal between the two countries, which will likely stay in place in the early days of the Biden administration, as outlined in Panjiva's research of Jan. 8.

That has led China to account for 13.3% of U.S. exports, which in total had increased by 26.5% year over year as a result of new liquefaction capacity, in the three months to Nov. 30, 2020, from zero a year earlier. U.S. exports to India, meanwhile, represented just 6.7% of the total. 

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.

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