Asian LNG buyers continue to snap up cheap cargoes as a mild winter in Europe has left storage inventories there high and more vessels are diverting to the region. But as spot prices move higher, buying activity is already slowing.
As temperatures have increased in the last week in North Asia, “we seem to be entering a low demand season in which additional buying could be limited,” Kpler analyst Go Katayama told NGI.
Companies in South and Southeast Asia have stepped up buy tenders with spot prices hovering below $10/MMBtu. Kpler expects strong demand to continue in Thailand, where a recent heatwave above 104 degrees F has resulted in robust natural gas demand to meet power needs regardless of prices.
Last month, state-run Electricity Generating Authority of Thailand, aka Egat, announced plans to import more liquefied natural gas to support power generation in the country, especially when power demand peaks during the hot season.
Overall, Asian spot demand has increased year-over-year due to continued structural growth of natural gas demand in the region as well as term contracts expiring, mainly in Japan and South Korea, Energy Aspects Ltd. LNG Markets analyst Min Na told NGI.
“Our balance still shows Asian LNG demand above their term supply, indicating spot demand,” she added.
Na said that buyers do not have to buy spot cargoes via tenders – they can also buy via bilateral deals. And on the emerging markets, despite Asian spot prices marginally firmer, Energy Aspects also expects continued spot demand from Vietnam, Thailand, Pakistan and Bangladesh, which are more likely to secure these volumes via tenders.
March imports to Asia reached record levels at 24.19 million tons (Mt), up from 22.17 Mt in February, according to data intelligence firm Kpler. Asia has imported 93.8 Mt of LNG year-to-date, up 8% over the same time last year. Meanwhile, European imports of the super-chilled fuel are down 19% over the same time to 38.3 Mt, according to Kpler.
The March trade increase was led by importers including China, India and Thailand, supported by a combination of both low LNG prices and colder-than-normal weather in North Asia.
China LNG imports picked up by 13% between February and March to reach 6.61 Mt, mainly driven by the drop in LNG prices and factories resuming operations after Lunar New Year celebrations in February, according to Kpler.
With recent price gains, however, some Chinese buyers have retreated to the sidelines to wait for prices to decline again, according to a recent note from Australia and New Zealand Banking Group Ltd. (ANZ).
India reached its highest level of imports last month since November 2020. The country imported 2.37 Mt of LNG in March, up 17% month-over-month. However, buying interest from India and South Korea is now reportedly subdued as stocks have crept back up, but Japan is likely to remain a potential buyer with lower than average inventories.
Indonesia could also start importing LNG with reports of strong demand, ANZ said. State-owned electricity company PT Perusahaan Listrik Negara is said to be looking to import its first LNG cargoes due to a gas supply shortfall, the Jakarta Post reported.
Bangladesh imported 500,000 tons for March, the highest volume of imports since last September. The Bangladesh government recently agreed to buy 24 LNG cargoes over a two-year period from an affiliate of Gunvor Group Ltd., according to reports. Bangladesh Oil, Gas and Mineral Corp. chairman Zanendra Nath Sarker said it is the first time Bangladesh would import LNG cargoes under a short-term contract.
