Asia’s LNG imports hit record, but supply surge keeps price muted
LAUNCESTON, Australia, Jan 5 – Asia’s imports of liquefied natural gas (LNG) rose to a record in December, driven largely by robust demand from China, according to data compiled by commodity analysts Kpler. However, despite the surge in imports, spot prices remained subdued due to the simultaneous increase in shipments from top exporters Australia and the United States.
In December, Asia imported 26.61 million metric tons of LNG, surpassing the previous high of 26.15 million tons in January 2021. China led the import growth with a surge to 8.22 million tons, reclaiming its position as the world’s largest LNG buyer from Japan. Japan and South Korea also witnessed gains in their LNG imports, with December volumes reaching the highest levels since early 2023.
While the demand for LNG in Asia increased in December, spot prices failed to rally. The weekly spot index dropped by 58.2% in 2023, primarily due to the easing of demand after a surge driven by Europe’s efforts to replace Russian pipeline natural gas following the Moscow-Ukraine conflict in February 2022.
Although spot prices remained muted, Europe’s LNG imports rose in December to 11.80 million tons, the highest since April of the same year. However, the demand for spot cargoes had been limited by mild winter weather in both Asia and Europe and ample inventories in the preceding months.
The surge in LNG imports in December was matched by increasing export performances from the world’s top three LNG suppliers. The United States, which overtook Australia as the largest LNG exporter in 2023, shipped out a record 8.56 million tons in December. Australia, too, marked a record high with exports of 7.26 million tons, while Qatar’s shipments reached 7.11 million tons, the highest since January 2023.
The simultaneous increase in both demand and supply raises questions about the future of spot prices once the winter peak demand period subsides. If supply remains steady, it is expected that prices may need to decline to attract more buyers into the market. A spot price below $10 per mmBtu could entice countries such as India, Pakistan, and Bangladesh to increase their LNG purchases.
It is worth noting that India’s LNG imports decreased in December to 1.86 million tons from 1.99 million tons in November. However, compared to December 2022, the figures indicated an increase from 1.32 million tons. India is considered a price-sensitive buyer, and historically, its highest import periods coincided with record-low spot prices.
As Asia’s LNG imports reach record levels, the market continues to be closely watched, particularly as the balance between supply and demand remains a crucial factor in determining future spot prices. The opinions expressed in this article are those of the author, a columnist for Reuters.
