BAKU, Azerbaijan, Nov.25
By Leman Zeynalova – Trend:
After finding bottoms in 2020, global LNG prices are expected to strengthen in 2021 as market conditions improve, Trend reports with reference to Fitch Solutions.
“Asia look set to lead the recovery in prices and demand. LNG flows into Asia’s large LNG markets such as China and India, have generally remained intact in spite of prolonged battles against Covid-19, due to a surge in residential gas use, increases in the demand for personal protective equipment (PPE) that require gas as input and in the case of China, an earlier economic reopening. In contrast, contracted deliveries into Japan and South Korea have suffered meaningful contractions, amid a resurgence in coal and nuclear power, and as demand growth outside of the residential sector slumped to new lows. LNG flows into both markets could find some seasonal support over the coming months, as the effects of La Nina bring a colder winter across the northern hemisphere markets, driving stronger demand for heating gas,” reads a report released by the company.
Fitch Solutions believes that conditions are forecast to improve upon 2020’s lows in 2021, although recoveries ex-China will not be even as economies take time to regain footings.
“The low number of new Covid-19 outbreaks in a number of smaller Asian gas markets such as Singapore, Taiwan, Thailand and Vietnam point to stabilising domestic conditions. This in turn could prompt restrictions to be further eased over the coming months allowing gas demand to normalise, although subsequent wave risks cannot be waved off as containment measures over mobility and cross border travels are gradually repealed. The outlook for Europe has deteriorated in recent months amid renewed lockdowns and the volatility in infection rates makes it difficult to call when strict pandemic curbs again placed over the economy would be eased. Europe’s inability to perform its traditional role as the global ‘gas sink’ during times of market surplus for cargoes from the US and the Middle East in turn, is expected to push even more supplies into Asia. This could cap any significant gains in Asia’s spot prices, while benefitting markets with lower term contract exposures,” reads the report.
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