Russell: Asia's LNG imports are recovering, bringing cargoes to Europe in need.
Asia's LNG imports are set to reach a six-month peak in July, while Europe's fall to the lowest level in almost two years.
The weakness in Europe shows just how far behind the second largest consumer region Europe is in building inventories to meet winter demand.
The?commodity analyst?Kpler estimates that Asia's super-chilled fuel imports in July were 23,05 million metric tonnes, an increase for the fourth consecutive month. This is about 6% more than in June, and compared to the same month last year.
China, the largest LNG importer in the world, has been driving the recovery of arrivals. Kpler estimates 5.62 million tonnes for July. This is the highest since January, and 55% higher than the 3.62 millions tons in April.
China had already cut back on LNG imports following a 143% increase in spot prices after the U.S.-Israeli attack on Iran, on February 28.
Spot LNG delivery to North Asia
The price dropped to $15.30 a mmBtu on June 19, just two days after Iran and the United States signed a ceasefire for 60 days.
The ceasefire raised hopes that the Strait of Hormuz could be fully reopened, allowing Qatar LNG to resume shipments. This would restore about 20% of global supplies.
It has now collapsed. The United States has resumed its trading strikes with Iran, and Tehran has announced that the Strait of Hormuz is now closed for vessels. It has also struck several ships including a Qatari gas tanker which attempted to pass through last week.
The return of hostilities is starting to affect the spot LNG price, which rose from $16.40 per mmBtu the week before July 10 to $18.00.
The higher spot price is likely to discourage Chinese importers. However, it will not deter other Asian countries, particularly wealthy ones such as Japan and South Korea.
U.S. SWINGS
It is also important to note that these countries are replacing Qatari LNG cargoes with cargoes coming from the United States. The United States is the largest LNG exporter in the world, ahead of Australia and Qatar.
According to Kpler, Japan's LNG imports are expected to hit 940,000 tons this July, which is the third highest on record. This is almost 15 times more than the 60,000 tonnes imported in February, just before the Iran conflict began.
Japan, which is the second largest LNG buyer in the world, has set a target of total imports reaching 5.37 million tonnes for July. This represents a five-month record and also surpassed the 4.72 millions tons?for the same period last year.
South Korea is the third largest LNG importer in the world. It will receive 870,000 tons U.S. LNG this July. This is the highest amount in Kpler's records, and up from 13,000 tons just in February.
Asia's LNG imports are expected to hit a record of 4,23 million?tons this July, which is about three times what they were in February, when the total was only 1.34 million tons.
Asia's demand of U.S. Liquefied Natural Gas (LNG) has caused Europe to see its imports drop from its top supplier. Kpler tracked arrivals?of only 3.94 million tonnes for July. This is down from the recent peak at 7.79 million tons in January, and it was also the lowest since November 20,24.
As a result of the shift in cargoes from America to Asia, Europe's total LNG exports are expected to fall to?6,90 million tonnes in July. This is the lowest level since September 2024.
The decline in LNG imports is due to?Europe's filling of natural-gas inventories falling well behind schedule. Data from energy analyst John Kemp shows a storage shortage of 158 terawatts hours by 7 July, about 22% larger than the seasonal average over the past 10 years.
The European utilities will have to raise the spot LNG price to levels that would knock Asian buyers like China and India off of the market.
The more spot prices rise, the longer Qatar LNG is effectively unavailable due to the Iran conflict.
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(source: Reuters)
