Fundamentals

Published at 15:12 30 Apr 2018 by

Global LNG imports in March rose by 1.25 Mt y/y to 25.05 Mt. While warmer weather and nuclear restarts cut Japanese LNG imports y/y and strong Egyptian domestic output cut MENA LNG take, the declines were more than offset by higher receipts elsewhere. South Korean imports rose y/y on record-high nuclear outages while Chinese take grew as restocking and the coal-to-gas switch programme boosted consumption. Exports into price-sensitive India were also up y/y, while very strong Mexican LNG import growth offset declines across the rest of Latin America.

Japanese LNG imports in March slipped by 0.21 Mt (3%) y/y to 7.93 Mt as milder weather and the restart of the Ohi Unit 3 and Genkai Unit 3 nuclear reactors cut gas demand. And although strong stockdraws in January and February incentivized heavy March buying, imports also slowed because of tighter supply caused by ongoing force majeure at PNG LNG, which has Japanese buyers. Across 2018 as a whole, we forecast that Japanese imports to be down by 2.4 Mt y/y owing to more nuclear and renewable generation and warmer forecast to continue through mid-May.

In South Korea, LNG imports grew by 0.78 Mt (22%) y/y to 4.30 Mt, higher y/y for the second consecutive month as record-high nuclear outages boosted power sector gas demand, a trend that appears likely to continue in April. We expect LNG imports to increase by 1.7 Mt y/y in 2018.

Chinese LNG receipts in March fell once more m/m, to 3.25 Mt, but were still 1.26 Mt (63%) higher y/y driven by strong demand. Overall this year, Chinese demand will be supported by the government extending its coal-to-gas switching programme through 2018. With underlying demand and import infrastructure both expanding, we expect Chinese LNG demand growth at 11.2 Mt y/y in 2018.

India’s LNG imports soared by 0.26 Mt y/y to 1.89 Mt in March, the second-highest monthly level on record, as LNG delivery prices for Indian delivery dropped by 1.58 $/mmbtu m/m to average 7.83 $/mmbtu for the month. Imports were also supported by the start of India’s long-term contract with Cheniere for US LNG, the first cargo of which arrived at Dabhol in late March. While the new infrastructure projects and further delays to Kochi’s ramp up looking to be delivering. Despite infrastructure delays, we still expect Indian LNG demand to grow by 2.6 Mt y/y in 2018 as new gas supply contracts into existing terminals help meet latent Indian gas demand.

Total Latin American takes inched up by 0.1 Mt y/y to 1.1 Mt in March as declines across the region were more than offset by Mexico, which logged its strongest month of y/y growth (+0.35 Mt to 0.57 Mt) since at least January 2014. LNG has continued to meet Mexican gas demand amid continuing domestic infrastructure bottlenecks. Our forecasts suggest Latin American LNG imports for 2018 will be almost flat y/y, up by just 0.1 Mt y/y to 16.6 Mt.

Countries in the MENA region imported just 0.63 Mt of LNG in March, lower y/y by 0.46 Mt. Egyptian imports were lower y/y by 0.35 Mt at 0.19 Mt, supplemented by declines in Israel and the UEA, neither of which took a cargo in March having taken one each in March 2017. Jordan was the only MENA nation to increase imports y/y in March, but only by 0.02 Mt to 0.28 Mt.

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