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Extreme Asian heat spurs LNG demand ahead of summer months
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Extreme Asian heat spurs LNG demand ahead of summer months
May 31, 2024 12:27 AM

SINGAPORE, May 31 (Reuters) - Extreme temperatures

across Asia are driving up liquefied natural gas (LNG) demand in

the region as importers seek cargoes ahead of summer, with

imports in South Asia hitting records.

This could tighten available supply and further lift Asian

spot prices that have already gained a third since

April, with heatwaves across South and Southeast Asia boosting

air-conditioner use and other cooling demand. Prices are now at

a near six-month peak above $12 per million British thermal

units (mmBtu) and are expected to remain elevated.

"Spot prices are now driven by Asian demand. Temperatures in

South Asia are rising due to a heatwave, increasing power

demand," said Siamak Adibi, principal consultant at energy

consultancy FGE.

While China may still see lower demand compared with its

record breaking shipments in 2021, demand from India and the

rest of Asia has compensated for any drop-off, Adibi said.

Parts of South and Southeast Asia saw extreme heat and

record temperatures in April and May, increasing electricity

consumption for cooling and straining power supplies. In India

on Thursday, at least 15 people died of suspected heatstroke in

the eastern states of Bihar and Odisha.

South Asian LNG imports rose nearly 20% from a year

earlier to 3.8 million metric tons in May, according to

analytics firm Kpler. India saw its highest import levels ever

for May at 2.4 million tons, while Bangladesh LNG volumes hit an

all-time monthly record at 0.6 million tons, according to Kpler

data.

New importers the Philippines and Vietnam, which started

taking LNG shipments last year, have also bumped up their

purchases. Vietnam received three cargoes in April and May for

power generation, while buyers in the Philippines shipped nine

cargoes so far this year versus 11 for all of last year.

Rising demand for cooling is set to continue as Northeast

Asia enters its summer. Japan's meteorological agency forecast

likely higher-than-average temperatures from June to August, and

China's energy regulator warned power supply will be tight in

some regions the next few months amid growing consumption.

"Various weather forecasts suggest Northeast Asia may

experience hotter-than-normal weather from May," said Energy

Aspects analyst Min Na in a note, adding that restocking demand

for LNG in Asia will be higher year-on-year this summer.

"We forecast a total restocking demand of 2.4 million

tons this summer across Japan, South Korea and Taiwan, up by 2.3

million tons year-on-year and 0.1 million tons above the

five-year average."

Japan government data showed LNG stockpiles by utilities at

2.06 million tons as of May 26, below the five-year average for

the period, as Tokyo is already experiencing hot weather.

South Korean power generation company Korea Midland

Power Co (KOMIPO), Thailand state-energy firm PTT,

Philippines power producer First Gen and Bangladesh's

state-owned Rupantarita Prakritik Gas Co Ltd (RPGCL) have all

also issued tenders seeking LNG for delivery in July.

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