(Repeats item with no changes in text. The opinions expressed
here are those of the author, a columnist for Reuters.)
By Clyde Russell
LAUNCESTON, Australia, Feb 6 (Reuters) - The momentum in
global liquefied natural gas (LNG) markets swung away from
Europe and back to Asia in January, but the modest increase in
demand wasn't enough to buoy spot prices.
Asia's imports of the super-chilled fuel rose to 24.0
million tonnes in January, up from 23.74 million in December
according to data compiled by commodity analysts Kpler, making
last month the strongest since January 2022.
Meanwhile Europe's imports slipped to 12.42 million tonnes
in January, down from December's 13.51 million, which was an
all-time high, according to Kpler.
Europe's imports remain strong by historical standards,
shifted structurally higher by Russia's invasion of Ukraine,
which triggered sanctions that have curtailed Russia's pipeline
shipments to the continent.
Europe used to receive about 40% of its natural gas from
Russia, but this figure has dropped sharply since the attack on
Ukraine on Feb. 24 last year, leading to a scramble for LNG
cargoes. Moscow calls its actions in Ukraine a "special
operation".
In 2021, Europe's monthly LNG imports ranged from a low of
4.54 million tonnes to a high of 9.15 million. Since the Ukraine
invasion they have ranged from a low of 8.8 million in August
last year to December's record.
In effect, Europe has taken LNG away from Asian countries,
largely by being prepared to pay more for spot cargoes,
especially from swing supplier the United States, which ranks
third behind Australia and Qatar among the world's biggest
shippers.
However, Europe's LNG demand eased off in January amid a
milder winter than usual and ample inventories.
The result was a drop in the spot LNG price for delivery to
North Asia , which slipped to $18.50 per million British
thermal units (mmBtu) in the week to Feb. 3, the lowest since
September 2021.
The price of futures linked to S&P Global Commodity Insights
Asian benchmark JKM price also slid last week, hitting a
low of $18.37 per mmBtu on Feb. 2.
The spot price has been dropping as some of the main Asian
buyers of these short-term cargoes have been buying less LNG.
China, which lost the title of the world's biggest LNG
importer back to Japan in 2022, landed 6.12 million tonnes in
January, according to Kpler, down from 7.28 million in December
and 7.18 million in January last year.
While China does have long-term purchase agreements in
place, it also buys spot cargoes. But it has taken lower volumes
since prices rocketed in the wake of the invasion of Ukraine,
culminating in a record high of $70.50 per mmBtu in the week to
Aug. 25.
Another buyer of spot cargoes is India, which imported 1.46
million tonnes in January, slightly up from December's 1.33
million but below the 1.69 million from January 2022.
JAPAN BUYING
Where there was solid demand in Asia was among the more
traditional LNG importers, such as Japan, which saw January
arrivals rise to 6.85 million tonnes from 6.60 million in
December, according to Kpler.
South Korea's imports rose to 4.95 million tonnes in January
from December's 4.50 million, while Taiwan's climbed to 1.76
million from 1.69 million in December.
The question for the market is whether spot prices have
dropped enough to tempt back Asian LNG buyers that were
previously reluctant.
Bangladesh may buy more spot LNG cargoes in coming months,
according to two officials at the South Asian nation's state gas
company, reversing a decision to halt spot purchases in the face
of high prices.
While a few additional cargoes heading to Bangladesh isn't
enough by itself to cause a surge in demand, it's perhaps a sign
that there is more interest in resuming spot LNG purchases.
It will be key to see if utilities in China, India and
Pakistan also decide that prices have declined enough to make
LNG imports economically viable once more.
In past years spot LNG prices have declined in the shoulder
seasons between the demand peaks in the northern hemisphere
winter and summer, but if there is pent-up demand for the fuel,
it may limit the downside in coming months.
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GRAPHIC-LNG imports by Asia, Europe vs JKM price: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Kenneth Maxwell)
Messaging: clyde.russell.thomsonreuters.com@reuters.net))
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