Asia is set to face expensive natural gas this summer in 2021

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The economic recovery in Asia, the world’s largest importer of liquefied natural gas, along with a rebound in demand for such gas, will keep spot prices of liquefied natural gas in this region at around $10 per million British thermal units for most of the summer – potentially the highest levels seen at this time of year in 7 years. According to Tianying Tong, despite market concerns that short-term spot demand in India and Japan might slow down due to the recovery of the coronavirus, Asian imports remained strong in May. Although the \"shoulder season\" between the winter peak demand and the summer peak demand is usually weak, liquefied natural gas imports have remained strong since the end of winter. The severe winter in the Northern Hemisphere led to higher-than-usual withdrawals from stockpiles, especially in South Korea, the world’s third-largest importer of liquefied natural gas. The region is currently building up stockpiles to meet summer electricity demand, as there is strong demand for spot goods at this time of year. Therefore, the current spot price of liquefied natural gas in Asia is estimated to be around $10 per million British thermal units, up five times from the $2 per million British thermal units seen last summer, when the coronavirus devastated demand and both suppliers and importers faced high uncertainty regarding short-term market trends. Tianyingtong noted that liquefied natural gas futures also indicate that prices from June to September will be around $10 per million British thermal units, suggesting relative tightness in the Asian market this summer – potentially the highest level seen during the summer since 2014. The four major global importers – Japan, China, South Korea, and India – saw strong imports in May. India’s demand for liquefied natural gas has weakened in recent weeks, with signs appearing earlier this month as shipowners moved liquefied natural gas shipments away from Indian ports due to reduced demand for gas in commercial activities and transportation. India’s liquefied natural gas imports in May could be higher than those in April. Spot demand is expected to weaken in June. Although spot demand for liquefied natural gas in India and Japan is expected to weaken to some extent next month, China’s imports in May are projected to rise by nearly 30% compared to last May, providing support for the Asian market. Tianyingtong stated that looking ahead, the strong demand recovery in key Asian markets will be accompanied by a similarly strong supply recovery in 2021. This will prevent another supply shortage in the summer of 2020 and reduce the likelihood of prices rising again as they did last winter. Spot prices in Asia are around $10 per million British thermal units, and the tight situation in the European market, with gas inventory levels below average, is good news for U.S. liquefied natural gas exporters. After a harsh winter, Europe has begun to replenish its natural gas reserves, with the cold snap in April leading to an abnormal increase in these reserves. Rising spot prices for liquefied natural gas in Asia and Europe will keep the door open for the United States to export liquefied natural gas to these two regions throughout the summer, as the transportation costs of U.S. liquefied natural gas will be lower than the spot prices in Asia and Europe. Prices at the Dutch hub for property rights transfers are near their highest levels since 2018, and spot prices in Asia are above $10 per million British thermal units, which will continue to encourage buyers to import record or near-record amounts of U.S. liquefied natural gas. Tianyingtong stated that in March 2021, U.S. liquefied natural gas exports reached a record level of $10.5 per million British thermal units, while the average price in April was $9.2 per million British thermal units. These were the highest export levels recorded since the United States began exporting liquefied natural gas in 2016.