Russell: Asia's LNG imports are recovering, bringing cargoes to Europe in need.
Asia's LNG imports are expected to reach a six-month peak in July, while Europe's will plunge to the lowest level in almost two years.
The weakness in Europe shows how far behind the second largest consuming region is in building up inventories to meet winter demand.
Kpler's commodity analysts estimate that Asia imported 23.05 metric tons of super-chilled gasoline in July, an increase for the fourth consecutive month. This is about 6% more than in June, and compared to the same period a year ago.
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 previously pulled back on LNG exports following a 143% increase in spot prices after the U.S.-Israeli attack on Iran, February 28.
Spot LNG delivery to North Asia
By June 19, just two days after the United States signed a ceasefire with Iran for 60 days, it had dropped to as low as $15.30 per million Btu.
The ceasefire raised hopes that the Strait of Hormuz could be fully reopened, allowing Qatar LNG to resume shipments. This would restore?about 20 percent of global LNG supplies.
It has now collapsed. The United States has resumed its trading strikes with Iran, while Tehran announced that the Strait was now closed to ships and had struck several ships including a Qatari gas tanker who attempted to?passage in last week.
In the week ending July 10, spot LNG prices rose from $16.40 per mmBtu to $18.00.
Higher spot prices are likely to discourage Chinese buyers, but they're unlikely to deter other Asian importers. This is especially true for wealthier Asian countries like Japan, South Korea, and Singapore.
U.S. SWINGS
Those countries are also replacing Qatari LNG cargos with those 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 LNG imports reaching 5.37 million tonnes for July. This represents a five-month record and also surpassed the 4.72 mtonnes 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 in July. This is about three times what they were in February, which was 1,34 million tons.
Asia's demand of U.S. Liquefied Natural Gas (LNG) has caused Europe to see its imports from its top supplier fall.?Kpler tracked arrivals at just 3.94 millions tons in July, down significantly from the recent peak of 7.79million tons in January, and their lowest level since November 2024.
As a result of the shift in cargoes from America to Asia, Europe's total LNG exports in July fell to 6.90 million tonnes. This is the lowest level since September 2024.
The decline in LNG imports is due to Europe's natural gas inventory replenishment falling well behind schedule. According to energy analyst John Kemp, the storage deficit was 158 terawatt-hours by July 7 – 22% more than the seasonal average over the past 10 years.
The European utilities will have to raise the spot LNG price to a level 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)
