Russell: Europe imports more LNG as it draws cargos from Asia
In January, the world's imports will reach their highest level in a single year as Europe's winter demands draw cargoes from Asia's top consumer region.
According to commodity analysts Kpler, a total of 38.12 millions metric tons super-chilled gasoline is expected to be imported by January. This represents an increase from the 37.69 in December, and the highest since January 2024, when 38.73 was imported.
The volume of LNG imports in January is the third highest ever recorded, highlighting the rapid growth in LNG imports due to the new supply coming online and the desire by Europe to replace Russian pipeline natural gas.
Kpler expects Europe's imports to increase to 11,82 million tons in January, from 10,87 million tons in December and the highest level since April 2023.
The volume of gas consumed in Europe in January is on course to be the fourth highest monthly total. This will only be surpassed by three months between 2022 and 2023, when Europe was desperate for gas following the shutdown of Russian pipelines in response to Moscow's invasion in Ukraine in February 2022.
While Europe's imports of LNG are expected to increase 8.7% from the previous month, arrivals in Russia are expected drop 11.6% to 1,60 million tons.
With Donald Trump returning to the U.S. presidency, there is increasing uncertainty about Europe's LNG imports.
Trump has made it clear that he wants to boost U.S. energy production, and the LNG exports to Europe are one of the best ways to achieve this.
The European Union could achieve several goals if it agreed to reduce imports of Russian cargos in favor of U.S. goods.
This includes putting more pressure on Russian President Vladimir Putin, to end the conflict in Ukraine. It also gives Trump a “win” that could help ease the threat to impose new tariffs on Europe’s exports to America.
The United States already has the largest LNG exports in the world, and commissioning new plants by 2025 will solidify that position.
The global LNG market could be in surplus by the end this year. It is therefore in both Trump's and U.S. LNG Exporters' interests to limit the markets for Russian LNG exports.
The imports of U.S. LNG by Europe are expected to reach a new record of 6,70 million tons this January. This is up from 5,20 million in December, and an increase of 11.7% over the previous high of 6.0 millions in January of last year.
SOFT ASIA
Kpler predicts that Asia's LNG imports will drop from 2.2 millions tons in December to just 1.81 million tonnes in January. This is the lowest level since February 2024.
The total LNG imports in Asia are also expected to decline in January. They will drop from 25.50 millions tons in December, a high for 10 months.
The drop is due in large part to a milder winter than usual, which has reduced demand for the top three importers of the world, China, Japan, and South Korea.
The relatively high spot prices also reduced demand, particularly in China. January's arrivals are expected to be 6.29 million tonnes, down from 7.58 million in December and almost 20% lower than the 7.83 millions of January 2024.
Spot price of LNG for North Asia
Last year, the price peaked at $15.10 during the week of Nov. 29. This was when cargoes arriving in January would have been secured.
The European Natural Gas Prices have also remained high, with the TTF benchmark ending up at 47.90 Euros per Megawatt Hour, which is equal to $14.73 for mmBtu.
The price is high enough to attract U.S. Liquefied Natural Gas (LNG) to Europe, and away from Asia. This is especially true when shipping costs and times are considered.
Prices in Europe are likely to be higher than in Asia, as Europe needs to replenish its natural gas stocks and is moving away from Russian LNG.
This may also limit the seasonal drop in Asian spot price in the shoulder seasons between winter and summer peak demand.
These are the views of the columnist, an author for.
(source: Reuters)
