JAPAN WEAKNESS
Much of the decline in Asia's imports can be put down to
Japan, which is due to receive 4.99 million tonnes of LNG in
March, the lowest monthly total since May 2020.
South Korea, Asia's third-biggest LNG buyer, is on track to
import 4.08 million tonnes in March - which would be the weakest
month since November - down from February's 5.14 million.
Slightly offsetting the decline from Japan and South Korea
is more cargoes going to India, Asia's fourth-biggest LNG buyer,
with arrivals of 1.59 million tonnes expected in March, the most
since November.
Effectively, Asia's LNG market has two current drivers, with
cheaper spot prices encouraging buying in China, India and other
price-sensitive importers such as Bangladesh.
The other driver is milder than usual temperatures, which
has curbed LNG imports in Japan, South Korea and Taiwan.
Another factor to consider is Asia's rising imports of
thermal coal, which is used to generate electricity and thus
competes with LNG.
Japan's imports of thermal coal are expected to reach 12.05
million tonnes in March, up from 11.07 million in February,
which would be the strongest monthly outcome since August.
South Korea's thermal coal imports are forecast by Kpler at
8.24 million tonnes in March, up from 7.55 million in February,
while Taiwan is on track to import 5.27 million, the most since
July last year.
China is also buying more thermal coal from the seaborne
market, with March imports estimated at 20.32 million tonnes, up
from 18.63 million in February and 15.81 million in March last
year.
Seaborne thermal coal prices have also been trending lower
since hitting record highs in March 2022 in the wake of Russia's
invasion of Ukraine on Feb. 24 last year.
However, renewed buying interest is starting to lead prices
higher, with Indonesian 4,200 kilocalorie per kg (kcal/kg) coal , as assessed by commodity price reporting
agency Argus, ending last week at $73.84 a tonne, up from $72.43
the prior week.
Australian 5,500 kcal/kg coal at Newcastle port , a grade popular in India, also rose last week,
ending at $121.18 a tonne, up from $117.95 the previous week.
Coal remains cheaper than spot LNG when used in a Japanese
power plant, according to Refinitiv data, but if coal prices
continue to recover and LNG keeps dropping, this situation may
reverse in coming weeks.
The opinions expressed here are those of the author, a columnist
for Reuters.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC-LNG imports by Asia and Europe vs Asia spot price: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Jamie Freed)
