CLYDE RUSSELL: Surging European LNG imports not at Asia’s expense

Launceston, Australia — Europe’s imports of liquefied natural gas (LNG) surged to an 11-month high in December, but the gain didn’t come at the expense of Asia, which also recorded higher arrivals.

A total 10.89-million tonnes of the superchilled fuel was imported by Europe in December, up 23% from 8.86-million tonnes in November and the highest since January’s 11.18-million tonnes, according to data compiled by commodity analysts Kpler.

The sharp increase in Europe’s imports came as winter demand rose and ahead of the end of Russian pipeline shipments through Ukraine at the start of 2025.

However, the increase in European purchases of LNG didn’t come at the expense of arrivals in Asia, the world’s top-importing region.

Asia imported 25.63-million tonnes in December, up from 22.64-million tonnes in November and the most since the 26.19-million tonnes in January, according to Kpler data.

However, Asia’s December figure was down 3.6% from the 26.58-million tonnes seen in the same month in 2023. Europe also recorded a drop from December 2023, when imports were 11.75-million tonnes, or 7.9% higher than the figure for December 2024.

A mild start to winter in North Asia with rising spot prices are likely to have curbed importer enthusiasm for LNG.

China, the world’s biggest buyer of LNG, saw arrivals of 7.66-million tonnes in December, down from 8.20-million for the same month a year earlier.

Similar small declines were recorded by Japan and South Korea, Asia’s second- and third-biggest importers.

India, Asia’s fourth-biggest LNG importer, actually saw a small increase in December arrivals year on year, coming in at 1.94-million tonnes, vs 1.86-million in December 2023.

However, India’s LNG imports have been trending weaker since reaching a 2024 peak of 2.60-million tonnes in June, with the lower arrivals coinciding with rising prices for spot cargoes.

The price of spot LNG for delivery to North Asia hit its 2024 low of $8.30 per million British thermal units (mmBtu) in early March.

At this price Indian buyers would have been encouraged to book spot cargoes, which would have taken up until June to be delivered.

However, the spot LNG price started rising from March, reaching $12.60 per mmBtu by mid-June, $14.10 by mid-August and peaking at $15.10 by late November.

It has since eased slightly to end at $14.60 per mmBtu in the week to January 3.

Prices above $10 per mmBtu have in the past resulted in India taking fewer spot cargoes, and have even encouraged Chinese buyers to resell LNG.

With Europe experiencing cold weather, it is likely that natural gas prices in the continent will remain supported, especially with storages dropping to just more than 70% full last week, below the 85% from the same time last year and the 76% five-year average.

European prices are high enough to encourage spot LNG cargoes to head to the continent, with the benchmark front-month contract at the Dutch TTF hub ending at €47.17 per megawatt hour, equivalent to $14.36 per mmBtu.

The loss of Russian pipeline gas through Ukraine and the faster drawdown of inventories means Europe is likely to keep LNG purchases at higher-than-usual levels for coming months, which may prevent spot prices from having their usual seasonal downturn when the northern winter ends.

However, there is also the possibility that increased LNG supply, especially from the US, will be sufficient to meet any lift in European demand.

Europe imported 5.22-million tonnes of US LNG in December, an 11-month high and more than double the 2.30-million from July, the softest month in 2024.

The world’s biggest LNG exporter is expected to increase exports in 2025, with two new plants, Venture Global’s Plaquemines and Cheniere’s Corpus Christi Stage 3, starting production late in December 2024.

Reuters