SINGAPORE- Liquefied natural gas (LNG) prices are poised for more gains as gas-hungry China guzzles cargoes to feed a rebound in economic growth while the easing of coronavirus-induced restrictions restores industrial demand in India.
Higher oil and coal prices have also helped lift global gas prices with spot Asian LNG prices doubling in just three months.
“We believe this has been driven by a tightening of Asian LNG balances led by strong generation demand in southern China at the same time that South Korea reached peak nuclear maintenance, while Covid-hit India LNG demand has stabilized,” analysts from Goldman Sachs said in a note earlier this week.
China imported more than 7 million tons of LNG in May, a record for that month, and looks set to import more over the next two months driven by strong industrial activity.
“Fuel-switching (from coal) across households and businesses appears to have regained momentum after a brief hiatus, and now has an added policy boost …that is heavily oriented around increasing clean fuels use and decarbonisation,” Fitch Solutions said.
South Korea’s newest and biggest nuclear reactor, Shin Kori-4, shut last month after a fire, which is expected to boost LNG demand. An official at operator Korea Hydro & Nuclear Power Co said it was not clear when the reactor would resume operations.
