According to Reuters, the latest Asian LNG spot prices are the lowest recorded for this time of year in a decade since the company first started publishing the price.
Moreover, these seasonal lows are likely to not just be a short term trend, as a mild winter is expected. China’s slowdown in its coal to gas switchover is also leading to reduced demand, which is dragging prices down.
Despite this, there is apparently cause for some optimism. James Taverner, director at research and consultancy firm IHS Markit, suggests there could be an increase in demand from South Korea. Currently, the South Korean government is reportedly planning to temporarily cease power generation from one quarter of its coal-fired power fleet from December to February. Furthermore, by March, up to half of the coal-fired power fleet could be taken temporarily offline. Taverner says this could lead to greater LNG consumption.
However, it is important to keep an eye on the big picture, and Summer 2020 in particular. With lots of new LNG supply projects due to come online in the next year, Taverner added that there is potential for the coming supply glut to cause Summer 2020 spot prices to drop even lower than the levels recorded this year.
Read the article online at: https://www.lngindustry.com/liquid-natural-gas/12112019/asian-lng-prices-to-remain-at-new-seasonal-lows/
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