Liquefied natural gas (LNG) prices are poised for more rallies as hungry China gulps up cargo to support a recovery in economic growth, while an easing of coronavirus-triggered restrictions recovers industrial demand in India.
Higher oil and coal prices have also helped lift global gas prices: LNG spot prices in Asia have doubled in just three months.
“We believe this was due to a tightening of the LNG balance in Asia, triggered by strong demand for generation in southern China, while South Korea reached a peak in nuclear maintenance, while LNG demand in India, hit by the coronavirus. has stabilized, ”Goldman Sachs analysts say. in a post earlier this week.
China imported over 7 million tons of LNG in May, a record for this month, and looks set to import more over the next two months thanks to strong industrial activity. read more
“The transition between households and businesses (from coal) appears to have picked up steam again after a short hiatus and now has additional policy momentum … which is largely focused on increasing the use of clean fuels and decarbonization,” Fitch said. Solutions.
South Korea’s newest and largest nuclear reactor, Shin Kori-4, was shut down last month due to a fire that is expected to boost LNG demand. A spokesman for the operator Korea Hydro & Nuclear Power Co said it was unclear when the reactor would resume operation.
Chief Financial Officer Hirofumi Sato told Reuters in April CFO Hirofumi Sato, Japan’s largest urban gas supplier, could increase storage capacity with tankers, which could boost imports. Utilities in Japan, the world’s largest importer of LNG, faced an energy crisis last winter that spiked LNG prices to record highs.
According to weather data from Refinitiv Eikon, temperatures in Tokyo, Seoul and Shanghai are expected to be higher than usual over the next two weeks, further boosting gas demand in Japan, South Korea and China for power generation.
Officials said this week that gas consumption in India will rebound in June after declining in the previous two months as states ease restrictions following a drop in coronavirus cases. read more
Gas consumption by the world’s fourth largest LNG importer could grow 6-8% in the current fiscal year if the country emerges from the pandemic, said Manoj Jain, chairman of GAIL (India), India’s largest gas pipeline operator.
LNG demand in Europe also remains robust as imports are expected to replenish storage volumes, which recently hit multi-year lows due to concerns over pipeline supplies fueled by rising tensions between Russia and Ukraine and a sharp rise in the carbon market that could spur producers electricity to prefer LNG to coal. – reported agency Fitch Solutions.
Supply issues, both planned and unplanned, are hampering some factories in the US, Australia, Malaysia and Indonesia, as well as supporting prices, traders said.
This is crowding out some demand from price-sensitive buyers such as Pakistan and Thailand, which received only high bids for tenders for cargo search for July.
Overall, LNG prices in Asia are expected to average around $ 7.30 per million British thermal units (millibt) in 2021 and $ 7.50 per megabyte in 2022, up from $ 4.20 per megabyte. last year, said Kieran Clancy, assistant commodity economist at Capital Economics.
“The outlook for LNG demand in the future remains promising as it is being used to fill gaps in power generation that cannot currently be filled with renewable energy sources,” he added.
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