The energy crisis in Europe is causing panic among Asian gas buyers, who are ‘launching’ into the market by offering very high prices to capture a greater part of the physical (spot) production of this raw material. As revealed by the Bloomberg agency , importers ranging from Japan to India are paying a very high price for this time of year for supplies.
Concerned about the sharp rise in the price of natural gas (LNG) in Europe, LNG traders in Asia have acknowledged that they are paying record prices for this time of year. Buyers from China to Pakistan have also raised the price they pay for gas, coal, propane and fuel oil to compete with the UK and Spain.
The war for energy
It does not seem likely that this fight to hoard gas and fuels will decline in the short term, as the weather will get colder and colder and energy shortages around the world could increase. The global rise in prices is expected to continue this winter, which will be the time when demand in the Northern Hemisphere will peak, fueling inflation and putting the economic recovery at risk.
“If the electricity bill is going to continue to rise for almost everyone, that will obviously hurt household spending and it will also affect general consumption and industry,” said Ogan Kose, managing director of Accenture.
There are many industries that could be forced to reduce their production due to the sharp increase in costs caused by the rise in gas and the electricity bill in general. This will not only mean higher inflation, it will also lead to lower production and therefore weaker economic activity . All this is putting Asian countries on notice, which want to ensure their gas supply, at least at current prices.
“Asia is panicking right now because they had a really bad winter last year,” says Accenture’s Ogan Kose. The companies that are in charge of buying and supplying gas to the countries are preparing for another bad winter , acquiring a sufficient amount of inventories and paying higher prices for that, says the expert.
The price of gas in Asia closely follows that of Europe
Nowhere is this more evident than in the liquefied natural gas market. On Wednesday, Japan’s Tohoku Electric Power and Gail India seized LNG shipments for delivery in November and December at prices that are among the highest in history for this time of year, according to several traders with direct information on this issue. .
These accelerated purchases at a high price are partly to blame for this week’s sharp rise in European gas prices. Asians fear that the rebound would extend to Asian LNG spot prices, which are already at high levels, say traders , who have asked to remain anonymous in exchange for providing this information to the Bloomberg agency .
LNG trading activity in the Pacific had stalled in recent weeks amid strong fluctuations in highly volatile prices, but risk and fear that the price will continue to rise could prompt more Asian importers to re-enter the market cash (physical purchase of gas) to fill their facilities to the top and cover the risk that prices continue to skyrocket.
On the other hand, according to what they explain from Bloomberg , Asia’s final suppliers are choosing to cover their supplies through cheaper long-term contracts linked to oil, or stopping spot purchases entirely in a bet that prices will eventually fall. in the next few months.