Asia takes LNG that Europe doesn’t need, spot price stays muted
ASIA’S imports of liquefied natural gas (LNG) rose sharply in March as the top-buying region took advantage of lower spot prices to draw cargoes away from Europe.

A total of 24.16 million tonnes of the super-chilled fuel landed in Asia in March, up from February’s 22.73 million and also up 11.5% from the 21.67 million in March 2023, according to data compiled by commodity analysts Kpler.

The strength in imports came as spot prices for LNG for delivery to North Asia remained muted in February and early March, when the bulk of cargoes would have been arranged.

The spot price hit the lowest in nearly three years in late February, when it dipped to US$8.30 per million British thermal units (mmBtu) in the week to Feb. 23.

This was down from the northern winter peak of US$17.90 per mmBtu in the week to Oct 20.

The spot price has shifted slightly higher in recent weeks, ending at US$9.50 per mmBtu in the seven days to April 5, up from US$9.40 the prior week.

The small lift in prices is probably not enough yet to deter the price-sensitive buyers of LNG in Asia, which include India and South Asian neighbours Pakistan and Bangladesh, but also increasingly China.

China’s imports of LNG rose to 6.61 million tonnes in March, up from February’s 5.82 million and 5.43 million in March 2023, according to Kpler.

China is the world’s largest LNG importer and it tends to buy more spot cargoes when the price is below US$10 mmBtu as this allows the fuel to remain competitive in some areas of China’s partially regulated natural gas market.

India’s LNG imports rose to a 40-month high of 2.29 million tonnes in March, up from 1.98 million February and 1.84 million in March last year.

Bangladesh’s arrivals were 470,000 tonnes in March, the highest since August last year and up from 400,000 tonnes in February.

LNG demand in developed Asian nations such as Japan and South Korea was steadier, which is not unusual given their reliance more on long-term contracts.

Japan, the world’s second-biggest LNG buyer, had imports of 5.96 million tonnes in March, down slightly from 6.1 million in February, but up from 5.51 million in March last year.

South Korea’s imports were 3.95 million tonnes in March, up from February’s 3.82 million but down from 4.38 million in March last year.

Europe eases

The robust demand for LNG in Asia stands in contrast to the softening in Europe, with Kpler data showing arrivals of 9.10 million tonnes in March, the lowest since September and down from February’s 10.23 million and 11.34 million in March last year.

A mild winter in Europe and elevated natural gas inventories have dampened demand for LNG, which in turn has allowed cargoes to flow east.

This can be shown by exports from the United States, which is a major swing supplier between regions.

Lowest since September

US exports to Europe were 4.23 million tonnes in March, down from 4.75 million in February and the lowest since September last year.

In contrast, US shipments to Asia were 2.21 million tonnes in March, the highest since September and up from two million in February.

The question for the market is whether Asian LNG demand is enough to keep pushing the spot price higher, or will the usual slack period between the northern winter and summer peaks lead to lower demand and prices.

It’s still too early to be definitive about Asia’s imports in April, with Kpler’s current estimate for arrivals of 20.12 million tonnes this month, in line with the 20.46 million in April 2023.

However, it’s likely that more cargoes will be assessed in coming weeks, meaning Asia’s demand for LNG in April may well exceed the same month a year earlier. It will most likely take an increase in the spot price to levels above US$10 per mmBtu before spot buying may ease in countries like China and India. — Reuters

Clyde Russell is a columnist for Reuters. The views expressed here are the writer’s own.
Commodities
ASIA’S imports of liquefied natural gas (LNG) rose sharply in March as the top-buying region took advantage of lower spot prices to draw cargoes away from Europe.