Asia's LNG prices are "rising" this summer

Author: Zhang Jiong

Core reading:

Since the beginning of this year, international natural gas prices have continued to rise, especially in the second quarter, when the heating season in the northern hemisphere has ended, and market prices have continued to remain high, showing the obvious characteristics of "off-season but not weak".

In May, the average spot price of LNG in Asia reached US$9.

It can be seen that the spot price of LNG in Asia is much higher than the European and North American markets.

With the recovery of the Asian economy and the rebound in demand for liquefied natural gas (LNG), as the world's largest LNG import region, Asia's LNG price will remain at the level of US$10 per million British thermal units this summer, which will be the highest price in 7 years .

Reuters columnist Clyde Russell, citing ship tracking data and port data from Refinitiv, a financial data agency, said that despite concerns that short-term spot demand in India and Japan will be stagnant due to the recovery of the new crown pneumonia epidemic, imports from Asia remained strong in May.

The cold winter caused a sharp drop in LNG inventory

Since the end of winter, although the "flat season" between the two peaks of demand in winter and summer is usually weak, LNG imports have been strong.

Therefore, the Asian LNG spot price is currently around US$10 per million British thermal units, which is five times the price of less than US$2 per million British thermal units last summer.

　　Russell pointed out that from June to September, the price of LNG futures will remain at around US$10 per million British thermal units, which indicates that the Asian market is relatively tight this summer and will be the highest price since 2014.

　　The world's four largest importing countries performed strongly

　　Refinitiv's LNG import volume assessment shows that the world's four major importing countries, Japan, China, South Korea and India, performed strongly in LNG imports in May.

　　Shipping and trade sources said that since the beginning of May, India's LNG demand has weakened, and shipping companies are transferring LNG from Indian ports because of the reduced demand for natural gas from commercial activities and transportation.

　　However, Refinitiv ship tracking data shows that India's LNG imports in May may be higher than in April.

　　Although the spot demand for LNG in India and Japan is expected to weaken in June, China is supporting the demand in the Asian market.

　　"In the future, the rebound in demand in major Asian markets will be as strong as the rebound in supply in 2021.

　　Or spawn the U.

　　The Asian LNG spot price is about US$10 per million British thermal units, coupled with tight supply in the European market and lower than average natural gas inventory levels.

　　After the severe winter, Europe has begun to replenish natural gas stocks.

　　Wood Mackenzie stated in its short-term LNG trade and price outlook for the second quarter: “The cold wave in April led to a net decrease in anti-seasonal inventories, further worsening the inventory situation that has been below the seasonal average for several months.
”

　　Due to the high LNG spot prices in Asia and Europe, LNG exporters in the United States will be open to export to these two regions throughout the summer because the transportation cost of LNG in the United States will be lower than the spot prices in Asia and Europe.

　　According to analysts, the natural gas price at the center of the Dutch Property Transfer Fund (TTF) is close to the highest level since 2018, and the Asian spot price exceeds US$10 per million British thermal units, which may create a new US LNG export record.

　　According to data from the U.
S.
Energy Information Administration (EIA), U.
S.
LNG exports hit a record high in March 2021, reaching 10.
5 billion cubic feet per day, and the average export volume in April reached 9.
2 billion cubic feet per day.
This is the beginning of the United States in 2016.
The highest record since the export of LNG.

　　In May, US LNG exports fell to 8.
6 billion cubic feet per day.
However, the US Energy Information Administration stated in its latest short-term outlook (STEO) that summer exports will exceed 9 billion cubic feet per day to meet the peak summer demand in Europe and Asia.
It is estimated that the average annual U.
S.
LNG export volume in 2021 and 2022 will reach 9.
2 billion cubic feet per day, higher than the 6.
5 billion cubic feet per day in 2020.