SINGAPORE Energy companies in Asian emerging markets are returning to the market for liquefied natural gas LNG cargoes, as prices have fallen to their lowest in more than a year.
The shifting market trend reversed after Russia invaded Ukraine and European buyers paid top dollar for supplies to make up for the shortfall in Russian supplies, as they stayed on the sidelines in Thailand, India and Bangladesh. If prices stay low, it may mean additional LNG demand that was not there last year.
Asian spot LNG prices last week were $19.50 per million British thermal units mmBtu, the first time they have fallen below $20 since September 2021, as inventories remain high with peak winter demand due to end soon. The August record of $70.50 mmBtu has dropped by a third this year, and prices have fallen over 70 per cent from August's record of $70.50 mmBtu.
A buy tender for one LNG cargo for delivery in late February was issued by Bangladesh's state-owned Rupantarita Prakritik Gas Company Ltd RPGCL last week after halting spot purchases in July.
Thailand's PTT has issued tenders seeking a total of 12 LNG cargoes to be delivered between February and April, while India's GAIL Ltd and Petronet sought cargoes for February delivery.
We are back in the comfort zone of many price sensitive South and Southeast Asian buyers. Kaushal Ramesh, senior LNG analyst at Rystad Energy, said we have seen Thailand and Bangladesh most recently.
Ramesh noted that spot LNG prices are now competitive with the price of coal for power generation. He sees the recent buying interest lending near-term support for LNG, along with cold temperatures from a polar vortex in North Asia.
Although prices remain higher than before the Ukraine conflict, emerging market buyers are sensitive to any movements higher, which could happen if China, the world's second biggest LNG importer, returns to the market after reopening from strict anti-COVID controls.
An Asian spot price of less than $15 mmBtu would be ideal for buyers to return to the spot market, according to Ryhana Rasidi, an analyst at Kpler.