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Asia purchases LNG that Europe does not require since the spot price is stable.

Asia Manufacturing Review Team | Monday, 08 April 2024

Asia Manufacturing Review Team

March saw a strong increase in LNG imports from Asia as the region's largest buyer took advantage of lower spot prices to divert cargoes from Europe. Data published by commodities analysts Kpler shows that a total of 24.16 million metric tons of the super-chilled fuel landed in Asia in March 2023, up 11.5% from the 21.67 million in February and up from 22.73 million in February of the previous year.

When most of the cargoes would have been negotiated in February and early March, spot prices for LNG for delivery to North Asia were subdued, which contributed to the strength in imports.

In the week leading up to February 23, the spot price fell to $8.30 per million British thermal units (mmBtu), the lowest level in over three years. In the week leading up to October 20, this was lower than the northern winter peak of $17.90 per mmBtu. With the spot price closing at $9.50 per mmBtu in the seven days leading up to April 5, it has moved up somewhat from $9.40 the previous week.

Price-sensitive LNG importers in Asia, such as those in India, Bangladesh, and Pakistan, as well as China, are likely not deterred by the little price increase just yet.

According to Kpler, China's imports of LNG increased to 6.61 million tons in March 2023 from 5.82 million in February and 5.43 million in March 2023. As the largest importer of LNG in the world, China often purchases more spot cargoes at prices below $10 mmBtu since this keeps the fuel affordable in some regions of the country's largely controlled natural gas market.

From 1.98 million tons in February and 1.84 million tons in March of previous year, India's LNG imports reached a 40-month high of 2.29 million tons in March.

Arrivals from Bangladesh increased from 400,000 tons in February to 470,000 tons in March, the largest since August of previous year. Given their greater reliance on long-term  contracts, it is not surprising that the demand for LNG was steadier in industrialized Asian countries like South Korea and Japan.

The second-largest LNG importer in the world, Japan, imported 5.96 million tons of LNG in March, up from 5.51 million tons the previous year but somewhat less than 6.1 million tons in February.

Imports into South Korea in March were 3.95 million tons, up from 3.82 million in February but lower than 4.38 million in the same month the previous year.