Asians re-enter the spot liquefied gas market. One more problem for Europe
Falling liquefied natural gas (LNG) prices have recently attracted buyers from emerging economies in Asia and South America, who couldn't afford sky-high prices last year and panicked over energy shortages. Borderline cases were Pakistan and Sri Lanka.
Southeast Asia and Latin America were the largest buyers of spot LNG for the second consecutive quarter in the first quarter, according to BloombergNEF estimates. In Southeast Asia, the Philippines and Vietnam recently bought their first shipments of LNG.
Earlier this year, South Asia returned to the spot liquefied natural gas (LNG) market as prices fell to a year-and-a-half low, prompting price-sensitive buyers in the region to buy the fuel that was prohibitively expensive last year.
The South Asian economies of India, Pakistan and Bangladesh showed signs of activity in the spot LNG market in February and March, encouraged by prices plunging by more than 70% from their all-time highs recorded in August 2022.
Since then the prices have dropped further.
In the week ending May 19, spot LNG prices in Asia fell below $10 per million British thermal units (MMBtu) for the first time in two years. Spot LNG prices have now plunged 86% from their all-time high recorded in August last year as natural gas prices in Asia and Europe soared on supply concerns ahead of winter.
In the future, prices will determine whether South Asia will continue to buy spot LNG. Intense competition between Asia and Europe will drive up prices, reducing the purchasing power of price-sensitive LNG importers such as India, Bangladesh and Pakistan.
“In the future, it will be a tug of war for marginal cargoes, i.e. outside long-term contracts. We see more flow shifting to Asia and, of course, LNG prices in Europe and Asia will decide, to some extent, where to stream cargoes,” said Oystein Kalleklev , managing director of shipping company Flex LNG. during the February press conference.
Many European companies have not concluded long-term contracts relying on spot prices, a move that risks exposing consumers to new, dramatic swings in energy costs. The experience of the 2021-22 crisis was useless.
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The article Asians return to the spot liquefied gas market. One more problem for Europe comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gli-asiatici-rientrano-nel-mercato-spot-del-gas-liquefatto-un-problema-in-piu-per-leuropa/ on Sun, 28 May 2023 09:00:37 +0000.