Global imports of liquefied natural gas (LNG) are projected to experience a significant surge in January, reaching their highest point in a year.
This increase is primarily attributed to the escalating winter demand in Europe, which is diverting LNG cargoes away from Asia, the largest consuming region, according to a Reuters report.
The shift in LNG flows from Asia to Europe is indicative of the intensified competition for this vital energy source, particularly during the winter months when heating requirements drive up demand.
LNG import volumes in January
The estimated volume of global LNG imports for January is 38.12 million tons, Reuters quoted data from analytics firm Kpler.
This represents an increase from the 37.69 million tons imported in December and is the highest monthly volume since January 2024, when imports reached 38.73 million metric tons.
LNG imports in January, the third-highest ever, highlighted the substantial growth of imports due to increased supply and Europe’s shift away from Russian pipeline natural gas.
Kpler expects Europe’s imports to reach 11.82 million tons in January, an increase from December’s 10.87 million tons and the highest level since April 2023, according to the report.
Europe’s January gas imports are also expected to be the fourth-highest monthly total. Higher import volumes were only recorded in three months across 2022 and 2023, when the continent urgently sought alternative gas supplies following Russia’s invasion of Ukraine and the subsequent shutdown of pipeline gas deliveries in February 2022.
It is also important to note that Europe’s LNG imports are projected to increase by 8.7% this January compared to last month.
Russia’s imports may decline
Meanwhile, imports from Russia are anticipated to decrease by 11.6% from December’s 1.81 million tons to 1.60 million tons.
Several objectives would be met if European countries agreed to phase out imports from Russia and replace them with US cargo.
This would put further pressure on Russian President Vladimir Putin to end the war in Ukraine while giving Trump a “win” that might ease the threat of new tariffs on European exports to the US.
The US is already the world’s largest exporter of LNG, and new plants coming online in 2025 will strengthen that position.
Although Europe’s imports of US LNG are expected to reach a record high of 6.70 million tons in January – up from 5.20 million in December and 11.7% above the previous peak of 6.0 million in January last year – the global LNG market may move into surplus by the end of this year.
This potential surplus would align the interests of both Trump and US LNG exporters in limiting markets for Russian exports.
Source: Reuters
Asian LNG imports to fall
Kpler data showed that Asia’s imports of US LNG are expected to reach their lowest point since February 2024, decreasing to 1.81 million tons in January from 2.2 million in December.
This coincides with an overall decline in Asia’s total LNG imports, which are projected to fall to 24.48 million tons in January from December’s 10-month high of 25.50 million.
The decline is primarily attributed to a milder winter, which has reduced demand in China, Japan, and South Korea, the world’s three largest importers.
Additionally, relatively high spot prices have further dampened demand, particularly in China.
January arrivals in China are expected to be 6.29 million tons, down from 7.58 million in December and almost 20% below January 2024’s 7.83 million.
Natural gas prices remain high
Last week, the spot price for LNG delivered to North Asia rose slightly from $13.90 to $14.00 per million British thermal units (mmBtu).
Last year’s peak price was $15.10 per mmBtu for the week ending November 29, when January-arriving cargoes would have been secured.
European natural gas prices remain high. The TTF benchmark closed at 47.90 euros per megawatt hour, equivalent to $14.73 per mmBtu.
This price is high enough to attract US LNG to Europe and away from Asia, especially when shorter shipping times and lower costs are considered.
This heightened competition could potentially lead to price fluctuations and supply constraints in certain regions, particularly in Asia, where the diversion of LNG cargoes could impact industrial and residential consumers.
The increased reliance on LNG imports in Europe underscores the region’s ongoing efforts to diversify its energy sources and reduce its dependence on pipeline gas, especially from Russia.
However, this dependence on LNG imports also exposes Europe to potential price volatility and supply disruptions in the global LNG market.
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