By Clyde Russell
LAUNCESTON, Australia- There are early signs that the rise in the spot price for liquefied natural gas (LNG) for delivery to Asia to a three-month high is starting to crimp demand from price-sensitive buyers such as India.
The spot LNG price rose to $10.50 per million British thermal units (mmBtu) in the week ended April 19, the most since Jan. 19, and up 26.5 percent from the low so far in 2024 of $8.30, reached in early March.
The recent increase in the price has been driven more by supply concerns, with the ongoing conflict in the Middle East fueling concerns that shipments from Qatar, the world’s third-largest LNG exporter, may be disrupted.
So far these fears have yet to be realized, but there have been increased costs for LNG shipments as vessels bound for Europe avoid the Red Sea, where Yemen’s Iran-aligned Houthi group has launched missile strikes against several vessels, although none of these were LNG carriers.
With the spot price once again above $10 per mmBtu, it has reached levels that have in the past resulted in buyers such as India, and even China, the world’s top LNG importer, pulling back on purchases.
This is because at these price levels imported LNG finds it hard to compete with other fuels in domestic markets.
India’s LNG imports for April are estimated at 1.90 million metric tons by commodity analysts Kpler, which is down from 2.26 million in March and also below the 1.98 million from April last year.
LSEG data pegs India’s April LNG arrivals at 1.79 million tons, a four-month low and down from 2.27 million in March and 1.88 million in April 2023.
