LNG demand, prices surprise — and a wave of new supply is yet to crest
Launceston, Australia — China’s record imports of liquefied natural gas (LNG) in December, and the doubling in spot Asian prices in the past six months, appear to contradict the market view that supply is overwhelming demand for the super-chilled fuel. But Similar to other commodities, spot LNG prices in Asia surprised on the upside in the second half of 2016 and early this year, peaking at $9.75 per million British thermal units (mmBtu) in the week to January 6. This is more than double the 2016 trough of $4 per mmBtu from April 15, although the gains should be seen in context of the record high of $20.50, hit in February 2014. LNG’s slide from the record high three years ago seemed inevitable, given apparent overinvestment in the sector. New projects are expected to boost capacity 50% from 2016 to 2020, taking global output to about 370-million tonnes.
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