Rising demand for liquefied natural gas (LNG) in key importing regions in Asia and Europe has not been enough to trigger a rise in spot prices.
The price of LNG on the spot market for delivery to North Asia < LNG-AS> fell to $16.50 per million British thermal units (mmBtu) in the week to November 10, down from $17.00 in the previous week .
The price has fallen for three weeks in a row, but is still higher than the recent low of $13.50 per mmBtu in the seven days to October 6.
The usual pattern for the spot price in Asia is a rally in the northern winter, followed by a decline in the summer shoulder season when demand is lower.
However, so far prices have not received their usual seasonal boost as demand remains relatively subdued and supply is more than sufficient, especially from the United States.
Asian LNG imports are expected to rise to 22.67 million tonnes in November, up from 21.18 million tonnes in October, according to data from commodity analysts Kpler.
The November figure will also be a slight increase from 21.41 million tonnes in the same month last year.
Much of the increase in Asian imports of the super-chilled fuel comes from China, the world’s second-largest buyer. Kpler estimates arrivals of 5.67 million tonnes in November, up from 5.41 million in October, but still below the 6.12 million of November 2022.
Japan, the world’s largest LNG importer, expects supplies of 5.41 million tonnes in November, unchanged from October and down slightly from 5.65 million in November last year.
India, Asia’s fourth-largest LNG buyer, is expected to import 1.3 million tonnes in November, down from 1.85 million in October.
India is seen as a price-sensitive buyer and the rise in spot prices from a low in early October to a high of $17.90 per mmBtu in the week to October 20 has likely dampened demand for spot freight.
EUROPE GOES
Europe’s LNG imports are expected to rise to 10.12 million tonnes in November, up from 9.50 million tonnes in October and the strongest month since May, according to Kpler.
However, European supply in November is expected to be below the 11.76 million tonnes of the same month in 2022.
Europe turned to LNG in the wake of losing much of its pipeline natural gas supply from Russia following Moscow’s invasion of Ukraine in February 2022.
A combination of demand destruction and high LNG imports through May this year has left Europe’s gas supplies at 99.6% full, meaning less need for additional LNG.
A colder than normal winter could deplete supplies, but even in this scenario it is unlikely that Europe will need additional LNG until January or February.
Europe is buying more LNG from the United States, which can offer lower prices than other major exporters such as Qatar due to a surplus of domestic gas production.
Europe’s imports of US LNG are expected to reach 5.45 million tonnes in November, up from 3.98 million tonnes in October, and the highest level since April.
More US LNG is also heading to Asia, with expected imports of 1.97 million tonnes in November, up from 1.83 million in October.
While there are some supply concerns, such as possible new sanctions on Russia’s Arctic LNG-2 project and an electrical outage at Chevron’s Gorgon plant in Western Australia, these are not enough to sustain a comfortable supply outlook. change.
This leaves the spot price at the mercy of demand, and while there has been some rebound in both Asia and Europe, this has not been enough to drive spot prices higher.
The opinions expressed here are those of the author, a columnist for Reuters.
Tags: Upturn LNG demand Asia Europe insufficient boost prices Russell November
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