LNG Price Drop Attracting Buyers From Emerging Markets

Buyers from growing nations in Asia and South America who couldn't afford the exorbitant costs last year have recently been drawn in by the fall in LNG prices.

According to projections from BloombergNEF, for the second consecutive quarter, Southeast Asia and Latin America were the two largest consumers of spot LNG.

The Philippines and Vietnam have made their first-ever LNG cargo purchases in Southeast Asia.

Liquefied natural gas (LNG) prices fell to their lowest levels in a year and a half earlier this year, encouraging the region's price-sensitive consumers to purchase the fuel that was unaffordable only a year before. 

Encouraged by the more than 70% drop in prices since the record highs recorded in August 2022, the South Asian economies of India, Pakistan, and Bangladesh showed signals of activity on the spot LNG market in February and March.

Since then, prices have further decreased.

For the first time in two years, Asia's spot LNG prices fell to below $10 per million British thermal units (MMBtu) for the week ending May 19.

Since their all-time high in August of last year, when natural gas prices in Asia and Europe spiked due to worries about supplies ahead of the winter, spot LNG prices have fallen by 86%.

Prices will decide if South Asia continues to purchase spot LNG in the future.

Price-sensitive LNG importers like India, Bangladesh, and Pakistan would have less purchasing power as a result of increased rivalry between Asia and Europe. 

“Going forward, it will be a tug of war for the marginal cargo.

“We do see more shift of flow into Asia and of course the prices of the LNG in Europe and Asia will, to some extent decide where the cargoes will be flowing,” Oystein Kalleklev, the chief executive of shipping firm Flex LNG, said on the company’s earnings call in February.