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New Delhi, Jan 26 The global demand for LNG will be driven by the Asia-Pacific and particularly China, ratings agency ICRA said in a report.The assessment comes after the spot price for natural gas (spot LNG prices) rose to an all-time high level in January 2021.The Japan Korea Marker (JKM), which is a representative of the spot gas prices for Asia, rose sharply to $32.94 per mmbtu for February delivery on January 12.The prices, which were under pressure for most part of CY2020, witnessed a sudden surge from December 2020 onwards.At such elevated price levels, ICRA expects a drop in the domestic LNG consumption on a YoY and QoQ basis in the current quarter."The steep rise in the price can be attributed to the extreme winters being witnessed in China, Japan, and Korea pushing up demand and supply disruptions in Australia, Qatar, Malaysia, Egypt, Norway, Trinidad and Tobago and Nigeria," said Prashant Vasisht, Co-Head-Corporate Ratings & Vice President, ICRA."In addition, the traffic congestion in the Panama Canal led to low availability of the LNG tankers which pushed up fleet charter rates which in turn pushed spot prices to record high levels although the same moderated to around $10-15 per mmbtu lately. The spot gas prices are currently significantly higher than the term LNG prices, which are available at around $8-9 per mmbtu. However, we believe that the current level of high prices would ease with the onset of spring and summer and supply-side issues getting addressed."According to Vasisht, most consumers are expected to switch to alternate fuels and feedstocks till the resolution of supply side issues."The current high spot LNG prices will lead to a rethink by several buyers in committing for new long-term firm LNG as against increasing their spot market exposure," he said.As per the report, although the spot LNG prices have had a meteoric rise in the last couple of months the prices may not hold up for long with significant capacity additions slated over the next five years.Nearly 37.6 MMTPA of liquefaction capacity was added globally in CY2019 and another 27.8 MMTPA in CY2020."The pace of liquefaction capacity additions will outpace LNG demand growth over the next five years," the report said.In addition, it cited that Malaysia and Indonesia are expected to become more active in the LNG markets as domestic production declines."However, with the lumpy capacity additions outpacing demand, the outlook for LNG prices remains subdued, although short-term volatility in prices due to weather, logistics or production related issues cannot be ruled out."( With inputs from IANS )Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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Business :Global LNG demand will be driven by Asia-Pacific: ICRA

New Delhi, Jan 26 The global demand for LNG will be driven by the Asia-Pacific and particularly China, ... ...