 "LNG, Gas")
Asia's imports of liquefied natural gas (LNG) are displaying contrasting dynamics in May, with strength in usually price-sensitive buyers like India, but a softer trend in the developed economies such as Japan and South Korea.
The top-importing continent is on track to receive about 23.61 million metric tonnes of the super-chilled fuel this month, according to data compiled by commodity analysts Kpler.
This is up slightly from April's 23.23 million tonnes, although on a daily basis May's arrivals are a touch weaker, while they are stronger than the 20.75 million from May 2023.
But while the overall LNG import figures are relatively stable for Asia this month, the breakdown is somewhat at odds with recent movements in the spot price.
India's May imports are estimated at 2.46 million tonnes, up from 2.03 million in April and the strongest month since October 2020.
The surge in arrivals comes even as the spot price for delivery to North Asia has been rallying, rising from a near three-year low of $8.30 per million British thermal units (mmBtu) in the week to Feb. 23 to a five-month high of $12.30 last week.
What is worth noting is that the cargoes arriving in India in May would have been secured in a window from later February to early April, a time when spot prices were rising but were still below the $10 per mmBtu level.
Now that the spot price has risen decisively above that level, it raises the possibility that Indian utilities will scale back purchases as LNG will no longer be competitive in the domestic market.
There may be some early signs of this with Kpler tracking 1.13 million tonnes ofarrivals so far in June, more than half of that coming from the United States, meaning those cargoes would have been secured at prices before the recent surge.
Another South Asian buyer with robust LNG imports is Pakistan, with Kpler tracking arrivals of 730,000 tonnes in May, which along with the same volume in January marks the strongest outcome since June 2022.
Qatar is the major supplier to both India and Pakistan and it's likely that the South Asian nations were able to secure competitive terms for spot cargoes given the Gulf producer is likely to have seen lower demand from Europe in recent months.
LNG vessels have been avoiding the Red Sea and Suez Canal because of attacks on shipping by Yemen's Iran-aligned Houthi group, even though so far no LNG carrier has been targeted.
This means Qatar's LNG shipments to Europe have been declining, dropping to 870,000 tonnes in May, the lowest since August and down from a recent peak of 1.23 million tonnes in January.
But they may be recovering with Kpler tracking exports of 1.02 million tonnes of LNG to Europe so far for June, and an ongoing recovery in volumes to Europe may cut those available at discounts to India and Pakistan.
North Asia eases
In contrast to the strength in LNG imports in South Asia, those in North Asia were softer in May.
China, the world's top buyer, is on track to receive 5.96 million tonnes in May, down from 6.47 million in April and the lowest monthly total since February, according to Kpler.
However, China's imports are likely to exceed the 5.80 million tonnes from May last year, continuing the trend so far this year of higher LNG arrivals amid a recovering economy and constrained hydropower output.
Japan, the world's second-biggest LNG buyer, is expected to import 4.83 million tonnes in May, down from 5.36 million in April, but higher than the 4.13 million from May last year.
Third-ranked South Korea is on track for May imports of 3.45 million tonnes, down from 3.99 million in April but higher than the 3.19 million from May last year.
The overall dynamic for the big three North Asian importers is that arrivals are trending lower, in line with usual seasonal moves, but imports are higher on an annual basis, which does provide fundamental support for the higher spot price.
However, the recent spike higher in spot prices may start to undermine imports in South Asia from July onwards, as well as in China, where a rise above $10 per mmBtu makes it difficult for LNG to compete in the domestic market.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
