S&P Global Commodity Insights: India's LNG imports seen at multiyear lows in August as prices undermine demand

Press release

09-09-2022

LNG imports by India -- the world's third-biggest energy consumer -- likely hovered near multiyear lows in August while natural gas inflows so far this year are also seen falling over 10% on the year, sources said citing the impact of shrinking global supplies and elevated prices.
The most recent buy-tenders awarded were by GAIL and GSPC concluded in late-July for August and September deliveries, respectively. The only other tenders awarded in the past month by GAIL were swap arrangements for its existing US FOB contracts in exchange for India-delivered cargoes.
As a result, the weak spot demand has significantly reduced the country's import of LNG. India's August LNG imports were only around 1.45 million mt, the lowest since at least 2018, compared to 1.84 million mt in July, according to shipping data from S&P Global Commodity Insights.
In 2022, we expect LNG imports to decline by 13% from 2021 and average just below 30 Bcm/year," said Ayush Agarwal, LNG analyst at S&P Global. "For the remainder of the year, we expect LNG imports to average at 81 mcm/d, 4 mcm/d below last year's levels. We believe there is still some downside risk to our present forecast," he added.
The PPAC data for the April-July period showed LNG imports fell 7.9% on the year to 9.97 Bcm. "The demand destruction has already happened in price-sensitive sectors like power and refining, where users can easily switch to cheaper alternate fuels. However, these prolonged levels of high prices have started to affect demand in other industrial sectors as well, where switching is a cost and time-intensive process," Agarwal said.
The Platts JKM for October was assessed at $62.77/MMBtu Sept. 5, S&P Global data showed. Asian spot prices have more than doubled since the beginning of the year, with the LNG West India marker assessed lower at $58.275/MMBtu.
With India LNG prices remaining over $4/MMBtu lower than delivered prices in Northeast Asia and Europe, suppliers have been pushing spot volumes to destinations where buyers are willing to pay a price premium.
Buyers in India are looking to sign term contracts to meet the growing demand and reduce their spot exposure.
"Companies don't have many options other than rationing or optimizing their current term supplies to meet the demand. Indian importers like GSPC awarded last outright buy tenders around $35/MMBtu. GAIL is leveraging its US contracts to meet domestic demand," Agarwal said.

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