Further headwinds ahead for LNG prices in Asia

Highlights:

• Spot LNG prices in Asia are the lowest they have been in years, having averaged USD4.3/million Btu over May – June, a level not tested since mid-2016, due to the effects of slowing economic growth and uncooperative weather.
• Further headwinds lie ahead for Asia’s LNG prices, in the form of ample global supply and rising competition from both indigenous and pipeline gas.
• A prolonged LNG price downturn will be positive for Asia’s LNG importers, particularly the region’s LNG newcomers, many of which are starting to contemplate conversion to cleaner energy sources, but are also facing challenges weaning off of cheaper coal.

Excerpt:

Spot LNG prices in Asia are the lowest in years. Asia’s LNG prices have been in freefall since September 2018, as ample supply, sluggish demand and robust early stockpiling by China’s SOEs largely capped prices over the peak winter months. These factors, next to elevated growth headwinds and a forecast of a cooler summer, look set to keep a lid on prices over what should typically be a stronger season for gas demand. Indeed, the Singapore SLInG benchmark has averaged US$4.3/million Btu over May – June (US$5.1/million BTU, on the year to date), a low not tested since at least mid-2016, and down nearly 45% from 2018’s average of US$9.3/million Btu. After expanding by 18% YOY in 2018, Asia’s LNG imports rose by a mere 1% through the first five months of 2019.

For more information regarding the full outlook, visit the Fitch Solutions website here.

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/04072019/further-headwinds-ahead-for-lng-prices-in-asia/