LNG short-term outlook: January 2022

High LNG flows into Europe, charter rates at multi-year lows, negative Asian arb – all factors point to a very different start to the new year. However, lessons learnt from 2021 should not be quickly forgotten. Recent market fundamentals: - Asia: Sufficient inventory, lacklustre demand – LNG shortages in winter 2020/21 meant that many Japanese, Chinese and Korean companies made better preparations for the current winter. Not only was starting inventory high in all three countries, but they had also pre-purchased much of their peak winter requirement. Warm weather and lower gas demand meant Asian buyers withdrew from competition against European buyers in the Atlantic for end-December and early January, allowing Northeast Asian spot prices to continue to trade at a discount.