Global short-term LNG demand tracker (Q1 2021)

A sharp winter price spike foreshadows what Asian LNG buyers will face in future, as the region’s dependence on LNG from the Atlantic basin is set to grow. Asian winter price spike: very few commodities experience a rapid 2000% price rally, but that’s what took place in Asia as the cost of LNG cargoes increased from $2/MMBtu cargoes during summer 2020, to almost $40/MMBtu only six months later. So acute was the LNG shortage and lack of inventory that one Japanese gas utility was seeking to buy any available heel volume from cargoes that had already discharged. ‘Heel’ volume would normally be used to fuel their return journey. Whilst this grossly inflated price was largely due to lack of liquidity, only a single cargo was traded at these extraordinary levels, however there are strong fundamental reasons to believe that increased seasonal price volatility will become a more regular occurrence going forward.