Surging spot prices for liquefied natural gas (LNG) are exacerbating a gas supply crunch in key fast-growing emerging markets in Asia just as a cold spell in other parts of the region boosts demand for the fuel, according to Reuters.
Companies from Pakistan to China have cancelled a flurry of LNG tenders this week, as sky high prices risk pushing up the input costs of industries, which could make energy more expensive for consumers.
It said: “Benchmark Asia spot LNG prices LNG-AS have soared sevenfold since May to six-year highs, driven by production losses in Australia, Malaysia, Norway and Qatar combined with accelerating use in China, India and elsewhere.”
Chong Zhi Xin, a director at consultancy IHS Markit, added: “Buyers with no alternatives are now paying top-dollar for prompt cargoes in January.”
The state buyer for Pakistan – one of the fastest growing LNG markets – did not award an emergency tender seeking three cargoes for delivery in January after it received high prices.
In India, Gujarat State Petroleum Corp (GSPC) and Indian Oil Corp did not award tenders seeking cargoes for January to February delivery.
In Bangladesh, gas shortages are already apparent. Bangladesh has only imported one spot cargo this winter despite issuing several tenders over the past few months, a senior energy ministry official said.
Buyers in China, the world’s second largest LNG importer after Japan, are also feeling the pinch, with one steel trader reporting a rise of around 2 percent in billet prices in steelmaking hub Tangshan, due to the rise of natural gas prices.
China’s top buyers PetroChina and China National Offshore Oil Corp (CNOOC) did not award tenders placed on the Shanghai Petroleum and Natural Gas Exchange, while Guangzhou Gas and Guangdong Energy also recently did not award tenders, traders said.
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