Europe’s imports of liquefied natural gas rose in October for the first month in 10 while those in Asia dropped for the first time since June, but not by enough to stop the combined total from increasing.

The rise in Europe’s imports and the decline in Asia’s is a reversal of the recent trend, but the shift in October is not enough to alter the year-to-date picture of a soft Europe and a strong Asia.

The October numbers are more likely a sign that European buyers took advantage of recent steady prices to top up natural gas inventories ahead of winter, while the slight dip in Asia was largely due to top buyer China’s imports slipping slightly.

Arrivals of the super-chilled fuel in Europe were 7.54 million metric tons in October, up from 6.37 million in September and the most since May, according to data compiled by commodity analysts Kpler.

However, the October total was below the 9.47 million tons from the same month in 2023, continuing a pattern of Europe buying less LNG amid ample inventories of natural gas ahead of the northern winter.

Asia’s LNG imports were 24.36 million tons in October, down from 24.72 million in September and the lowest since July, according to Kpler data.
However, Asia’s arrivals in October were up 14.6% from the same month last year, continuing the top-importing region’s pattern of buying more LNG this year.

For the first 10 months of the year Asia’s LNG imports were 239.77 million tons, up 10.3% from the same period in 2023.

In contrast, Europe’s LNG imports were 81.48 million tons for the first 10 months of 2024, a drop of 20% from the same period last year.
Even if Europe’s imports do show the usual seasonal uptick for winter, it is still likely that they will show a significant drop in 2024 from 2023.

This can partly be explained by milder weather, but also by a structural shift toward renewables for electricity generation and the shuttering of industrial plants that used natural gas as fuel or feedstock.

But the decline in Europe’s LNG imports so far this year has been offset by the increase in Asia.
Combining the two regions sees total imports of 321.23 million tons for the first 10 months of this year, up 0.6% from the same period in 2023.

CHINA TRUCKS
Much of the growth in Asia’s demand has been led by China, the world’s biggest LNG importer, which has seen arrivals jump by 13.4% in the first 10 months of the year to 64.55 million tons, versus the same period in 2023.

China has been using more LNG as sales of trucks powered by the fuel surge, with the 108,862 vehicles sold in the first half of 2024 being more than double the volume for the same period last year, according to data provider CVWorld.

The shift to LNG trucks in China is partly driven by subsidies and tighter emissions standards, but also because the fuel is about 20% cheaper than diesel at current prices.

The increase in demand in China, and Asia more broadly, has served to keep spot LNG prices on a gently rising trend for much of 2024.

After reaching a post-winter low of $8.30 per million British thermal units (mmBtu) in late February, Asia’s spot LNG price LNG-AS has moved higher, peaking at $14.10 in mid-August and moving sideways since then, ending last week at $13.80.
The largely steady prices reflect that LNG supply is adequate to meet Asia’s rising demand, with top global exporter the United States meeting much of the increase.

Asia’s imports from the United States rose from a 2024 low of 1.51 million tons in February to a high of 3.43 million in July, and have remained high, coming in at 3.22 million in October and 3.25 million in September.

Asia’s LNG imports typically peak in December and January as demand ramps up for winter heating, and if the usual seasonal pattern is repeated it is likely that volumes will show some gains over the next few months.
But the risk is that the increase is modest, given forecasts for a milder than usual start to winter, which will lead to lower consumption at the start of the heating season.

Source: Reuters by Clyde Russell and edited by Christopher Cushing