Limited prospect of global LNG market softening in 2022 - ICIS

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Jun 30, 2021, 05:57 ET

LONDON, June 30, 2021 /PRNewswire/ -- Tight LNG market conditions are expected to persist in 2021 on the back of resurgent demand, with only a limited easing of availability in 2022, according to a global forecast by ICIS.

Underlying LNG demand will rise 7.9% year-on-year to 384.5 million tonnes in 2021, outpacing LNG supply growth of 6.8%, according to the ICIS LNG Supply and Demand Forecast. Reliability issues and a cyclical decline in capacity additions have constrained the ability of LNG producers to respond to a demand rebound driven by robust recovery from the coronavirus pandemic and the need to refill Europe's depleted gas stocks after a protracted winter.

ICIS' monthly global balance shows LNG shortfalls will be particularly acute in Summer 2021, before easing temporarily in the shoulder months of September and October, offering global markets temporary respite before further tightness in Winter '21/'22.

Into 2022, global underlying demand is expected to rise 3% to 396 million tonnes as robust consumption in China's industrial and residential sectors, alongside other high-growth markets, counteract declining gas generation mix in mature buying regions, such as Japan. Loaded volumes rise to 402.3 million tonnes, driven by new production capacity and repairs to existing plants, leading to a finely-balanced market after boil-off losses are taken into account.

Strong demand from Asian markets and a strong draw to refill diminished European stocks is expected to lay the foundations for US production to rise 11.3% year-on-year to 79.8m tonnes, exceeding levels in Australia (77.8m tonnes) and Qatar (77.4m tonnes), temporarily placing it as the world's largest LNG producer.

"Increased flows expected through the Nord Stream 2 pipeline will be absorbed by demand to replenish Western European storage ahead of Winter '22/'23," said Simon Ellis, Head of Global Gas Analytics at ICIS, "Given seasonally normal temperatures, demand for injections is expected to support Atlantic basin price spreads that would allow US plant to produce near capacity levels."

The ICIS LNG Supply and Demand Forecast provides traders and analysts unparalleled visibility into the short-term traded horizon. The impact of quantifiable events such as power plant outages are reflected in close to real-time in addition to regular monthly updates. The forecast also presents a monthly global LNG balance, highlighting expected periods of fundamental tightness and length.

"Imbalances in the model are designed to act as a tool to alert traders to arbitrage opportunities, or discrepancies in market pricing. We aim to reflect the trader's experience by quantifying these events and adding them to the forecast as promptly as possible," said Ellis.

About ICIS

ICIS is a trusted source of global commodity intelligence for the energy, chemical and fertilizer industry. We are a division of RELX, a FTSE 15 company with a market cap of £34.1 billion and an employee base of over 30,000 experts across 40 countries.

At ICIS, we help businesses make strategic decisions, mitigate risk, improve productivity and capitalise on new opportunities. We make some of the world's most important markets more trusted and predictable by providing data services, thought leadership and decision tools. As a result of our unmatched global presence, we can deliver targeted connected intelligence to influence thousands of decisions across supply chains every single day. We shape the world by connecting markets to optimise the world's valuable resources. With a global team of more than 600 experts, ICIS has employees based in London, New York, Houston, Karlsruhe, Milan, Mumbai, Singapore, Guangzhou, Beijing, Shanghai, Dubai, Sao Paulo, Seoul, Tokyo and Perth.

About RELX

RELX is a global provider of information and analytics for professional and business customers across industries. The Group serves customers in more than 180 countries and has offices in about 40 countries. It employs approximately 30,000 people of whom almost half are in North America. RELX PLC is a London listed holding company which owns 52.9% of RELX Group. RELX NV is an Amsterdam listed holding company which owns 47.1% of RELX Group. The shares are traded on the London, Amsterdam and New York Stock Exchanges using the following ticker symbols: London: REL; Amsterdam: REN; New York: RELX and RENX. Total market capitalisation is approximately £36.9bn, €42.9bn, $51bn.

SOURCE ICIS