Convenient global LNG market intelligence, analysis and price dynamics released monthly
Commodity Insights is excited to announce the official release of our LNG Unlocked portal, which provides a comprehensive one-stop-shop for industry participants incorporating the latest sector data and insights.
The global LNG market is becoming more complex and difficult to predict as we see an increase in production, the number of buyers and growing pressure on shippers. We believe that in order to respond quickly, a robust and unique combination of data and insights are required. In response to this need, Commodity Insights’ LNG Unlocked portal provides monthly data-driven insight and expert analysis, designed to give you a complete perspective of historic, current and future market conditions.
To celebrate the release, we are pleased to attach a complimentary copy of this month’s (February 2021) Market Report (see below), incorporating full global data for December 2021, which was sent to subscribers last week.
For any queries, please talk to one of our friendly team for assistance with a range of our products from bespoke reports, portal information and general enquiries.
LNG Market Report: Feb 2022 LNG Unlocked
As 2021 drew to a close, traded volumes of LNG remained strong in December at over 36Mt globally, amidst no let-up to the extreme price volatility emanating from concerns of a gas supply crisis in Europe (see our analysis). Record high gas prices in Europe, which remain sensitive to uncertainty around Russian gas supply, reached US$61/MMBtu in December 2021, surpassing prices in Asia which eased considerably over the month to average out at US$38/MMBtu.
Europe led the demand charge, with imports just under 8mt in December 2021, as the threat of armed conflict between Russia and the Ukraine invoked contingency plans by European generators to boost dangerously low gas inventories. With new (uncommitted) supply capacity (Sabine Pass and Calcasieu Pass), producers in the United States took advantage of the rush for gas cargos, exporting a total of 4.35mt of gas to Europe in December 2021. The largest increase in imports (from all suppliers), was the United Kingdom, which surged 83% from 0.91mt in Nov 21 to 1.67mt in Dec 21 (up 49% year-on-year). French LNG imports rose to 1.93mt in December (a 179% year-on-year increase), while Spain imported 1.81mt (up 63% year-on-year).
China’s appetite for LNG at December prices was again tested with imports easing 16% year-on-year at 6.8mt. These cargoes were mostly contracted in August and September 2021 when prices were less than US$20/MMBtu. The average price of imported LNG, comprising both term and spot cargoes, was estimated at US$18.93/MMBtu in December 2021, up 7% month-on-month, and over triple the price of imported pipeline gas which was estimated at US$6.15/MMBtu, down slightly from US$6.22/MMBtu in the previous month.
Given Chinese buyers have historically switched to pipeline imports when LNG prices are over US$10/MMBtu, the current ’sabre rattling’ in Europe might be an opportunity for China to absorb excess pipeline gas from Russia. Despite this, Chinese LNG imports in 2021 were 15% higher at 79mt, overtaking Japan as the single largest LNG importing country. Japanese volumes were down 14% in December at 6.95mt as the threat of a cold winter subsided. SE Asia imports of LNG had a strong month, with Thailand (56%), Singapore (48%) and Bangladesh (56%) recording strong growth on December 2020, while South Korea’s December imports increasingly 5% to 4.66mt (up 16% year-on-year).
Australian supply rose 9% for the month at 7.1mt despite unplanned maintenance at Prelude and Gorgon. December is typically a strong month for Australian exports as North Asian buyers bolster their inventories ahead of winter. Russian volumes were flat year-on-year at 2.9mt and remains a potential supply risk should western democracies be successful in convincing the United Nations security council to impose trade sanctions on Russia as a result of their activity on the Ukrainian border.
Key market developments during the month included:
- Despite a drop in December, LNG exports from the three LNG export facilities in Gladstone hit a record annual high in 2021 with 23.28mt of LNG.
- For the first time ever, the United States was the world’s top LNG exporter in December 2021 at 7.1mt. The rise of the United States, which transformed from a LNG importer to an exporter in less than one decade, is due to the shale gas revolution supported by billions of dollars of investments in this field.
- In a sign of the times, South Korea replaced two of its oldest coal-fired power plants (Honan No. 1 and No. 2 – a combined capacity of 500MW) with gas fired generation.
- China’s pipeline natural gas imports reached a new record of 4.02mt in December 2021, up 10.8% year-on-year and 5.2% higher month-on-month.
Catalysts to watch next month:
- While 2022 promises to deliver additional LNG supply growth, this is dependant on the successful ramp to nameplate capacity at Sabine Pass Train 6 and Calcasieu Pass LNG (commissioning occurred in November 2021).
- Potential Chinese absence from the LNG market while prices remains elevated.
- A further escalation in tensions between Russia and west Europe over the Ukraine.
- Teething problems with the restart of unplanned maintenance disruptions at Australia’s Prelude LNG and Gorgon LNG.