Oil-linked contract prices have continued to fall, but they are set to rise again during H2.
The average price of LNG imports into Northeast Asia continued to fall in March. Japan’s average LNG import price for the month was $7.2/MMBtu, down by 41% year on year. Meanwhile, in South Korea the average price was $7.3/MMBtu and in China it was $6.7/MMBtu, down by 45% and 34% year on year respectively. Oil-indexed contract supplies dominate gas imports in Northeast Asia even when spot cargo intakes are relatively high. With major players such as Kogas having largely left the spot market in recent months, the average import price has reflected oil-indexed supplies even more than usual. With oil prices likely to continue to rise over the second half of the year, average prices into Northeast Asia are also expected to go up. Although the increase in oil prices is not likely to be dramatic – GGA expects prices to be around $49 per barrel in H2 – contract and therefore average prices will still rise following the lag, which is typically three months.
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