Page 9 - GLNG Week 01 2021

GLNG COMMENTARY GLNG

A positive start to 2021 for LNG

After a tough 2020, this year has started relatively positively for the LNG industry

PERFORMANCE THE LNG industry took a battering in 2020, This combination of factors is reported to
but ended the year and started 2021 on a rela- have sent buyers of LNG scrambling to secure
WHAT: tively positive note. This is in large part owing supplies, which is helping to maintain upward
The LNG industry has to higher LNG prices, with demand enjoying its pressure on prices. Indeed, Reuters reported
seen a relatively positive seasonal winter boost thanks to cold weather. this week that Japan’s JERA – the world’s largest
start to 2021. And despite new lockdowns related to the coro- buyer of LNG – was having to operate some of
navirus (COVID-19) pandemic in various parts its gas-fired power plants at lower rates owing to
WHY: of the world, there are hopes that the virus could lower stockpiles of LNG.
Higher prices for the fuel soon be contained as several new vaccines are “We are trying our best to secure LNG supply
have helped improve the rolled out. through our long-term contracts and the spot
outlook for the industry. These factors are all feeding into short-term market which trades supply to be delivered in
bullishness, but there are also indications of about 1.5-2 months,” a JERA spokesman told
WHAT NEXT: longer-term confidence, at least among some the news service. He added that his company
Certain developers are developers. And this cautious optimism could was also seeking cargoes for quicker delivery
demonstrating more ultimately lead to more final investment deci- and running its coal plants at full capacity.
bullishness on long-term sions (FIDs) being taken in 2021, even though JERA is not the only Japanese company faced
investments. further volatility cannot be ruled out. with this situation, with Reuters also citing a
Kansai Electric Power spokesman as saying his
On the up company was seeing declining LNG inventories,
Just nine months ago, in late April, north-east forcing lower run rates at some of its gas-fired
Asian spot prices fell to record lows of around power plants.
$1.675 per million British thermal units ($46.33 Demand for LNG from China and South
per 1,000 cubic metres). However, the Argus Korea in particular is also reported to be rising.
Northeast Asia (ANEA) front half-month price Indeed, Reuters reported separately last week
rose to $21.785 per mmBtu ($602.57 per 1,000 that China’s monthly imports of LNG had hit
cubic metres) for the first-half February on Jan- a record high of over 9mn tonnes in December,
uary 6, surpassing a previous record set in 2014. according to shiptracking data from Refinitiv
This has been attributed to a number of fac- Eikon. This figure means China overtook Japan
tors, including strong consumer demand, colder as the world’s top importer of the super-chilled
than expected winter weather and a shortage of fuel for a second straight month in December.
prompt LNG supplies and spot tankers. Recent The data also showed that Japan was set to
outages at various liquefaction plants around import record monthly volumes of around
the world are also thought to have played a part. 8.1mn tonnes in December.

Week 01 08•January•2020 www. NEWSBASE .com P9