LNG Short-Term Outlook - April 2021

The post-winter LNG price rally shows the strength of Asian demand; however, the market is pricing higher than we fundamentally believe is justified. Strong Asian growth carries risk: In each of the four largest LNG importing markets in Asia (Japan, China, Korea, India) we expect sizeable growth (or at least a rebound) in 2021 imports. However, each of these carries country-specific risks. In Japan, total power demand continues to decline, putting pressure on gas as the marginal fuel source. China's growth depends on continued strong economic growth. Korea's growth is largely through government-enforced coal-to-gas switching and one-time inventory restocking. India's growth assumes only a partial recovery in off-shore domestic gas production, and that covid lockdowns are less severe than those experienced in 2020. Barring any of these factors changing, we expect another year of strong APAC growth in 2021. The growth story in 2022, however, is looking less rosy....