The rise and rise of US LNG…
American LNG is becoming ever more important to the global energy markets as Europe turns away from Russian supplies, and as potential disruptions loom over Strait of Hormuz, a vital fuel transit chokepoint as a result of the Israel-Hamas war.
Meanwhile, whipsaw volatility in Europe’s gas benchmark, the Dutch Title Transfer Facility (TTF), means European utilities are venturing further upstream and signing US LNG sales and purchase agreements. That increases demand for US LNG—and increases the significance of US LNG export facilities set to come online next year.
US LNG exports
Source: US EIA
…and China buys more Qatari LNG
Meanwhile, China’s state-owned Sinopec on Nov. 4 signed a new 27-year LNG supply contract with Qatar Energy. Under the deal, the firms will cooperate on phase two of Qatar’s North Field expansion project, which will supply 3 million metric tons of LNG per year to Sinopec. The deal comes after a first 27-year deal inked between Sinopec and Qatar Energy last November, and follows a similar 27-year LNG deal that China National Petroleum Corp. signed with Qatar Energy in June.
The deals aren’t just about getting fuel. For one, the larger imports help China take a more active role in global LNG trading, which in turn gives it greater sway in international pricing. The imports also generate business opportunities for Chinese shipping companies. Figures from the China Association of the National Shipbuilding Industry show that Chinese shipbuilders accounted for nearly 50% and 70%, respectively (link in Chinese), for newly constructed ships and new ship building orders in the first seven months of 2023.
Albemarle’s lithium warning
The world’s largest lithium producer, US-headquartered Albemarle, is warning that tumbling lithium prices could mean it will lose market share to Chinese competitors. Prices of lithium have dropped over 70% this year, weighing on Albemarle’s income and forcing it to pursue a more conservative strategy.
Meanwhile, Chinese competitors are pushing ahead with development plans. And falling lithium prices could also mean a consolidation in the Chinese market (link in Chinese), eliminating smaller players while leading companies cut costs, raise efficiencies, and grab market share.