Asian LNG prices have fallen in tandem with European gas prices recently, with spot JKM dropping below 11 $/mmbtu for the first time in almost 2 years. These lower levels are more attractive to price sensitive spot buyers (e.g. in South & SE Asia), while increased Chinese downstream demand has led to Chinese buyers taking more of their contracted cargos.
While Asian demand in April was up by ~2.2 bcm year on year, it remains over 1 bcm lower than April 2021 levels, as commodity markets face global macro headwinds. The extent of returning Asian demand is set to be crucial as we enter Winter 2023, as a cold snap this winter combined with anaemic Russian flows could drive a sharp rise in prices – particularly if Europe is forced into an LNG bidding war with Asia.