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Weak LNG spot prices have little impact on Asia, while boosting Europe

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LNG Industry,


According to Reuters, low LNG spot prices are having little impact in Asian markets, while the European import market has seen a significant boost.

Asian LNG spot prices have seen a marginal increase in light of recent signs of some peak summer demand however, the fact remains that for many Asian LNG buyers the costs are still too high.

In the LNG industry there is a focus on spot prices as a tool with which to measure the extent of oversupply. However, the spot market does not present an entirely accurate picture of the current state of supply, as it does not reflect the greater volumes of LNG being traded on long term contacts. This is important to note, as it is long term contracts that make falling LNG spot prices largely irrelevant to Asian LNG buyers who have already have the majority of their demand covered by such agreements. For low spot prices to be beneficial to these traders, demand would need to rise to above average levels.

This is certainly not the case in Europe, where the low spot prices have fuelled an 87% increase in LNG imports for the January to July period (up to 51.5 million t from 27.5 million t in the same period in 2018).

Reuters suggests that this is a sign that in order for LNG producers to boost demand and sell their product, they will need to accept lower prices and more flexible pricing systems, marking a significant shift that would undermine the economics of existing and new ventures.

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/19082019/weak-lng-spot-prices-have-little-impact-on-asia-while-boosting-europe/

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