Summary of Global Gas and Power Insights - February 2025 Industry Overview - The report focuses on the global liquefied natural gas (LNG) market, particularly the impact of China's new tariffs on US LNG imports and the subsequent effects on global trade flows and pricing dynamics. Key Points China's Tariff on US LNG - China announced a 15% tariff on US LNG imports effective February 10, 2025, which is expected to reshape global trade flows but have limited impact on Asian JKM LNG and European TTF natural gas prices [1][7][24] - In 2024, the US supplied only 5.6% of China's total LNG imports, and in 2023, only 4.0% of US LNG exports went to China, indicating a minimal direct impact on the overall market [7][24] Historical Context - The report references the 2019 scenario where China diversified its LNG imports away from the US due to tariffs, leading to a 12% year-over-year increase in total LNG imports from other countries [2][8] - US LNG exports grew by 68% year-over-year in 2019, compensating for the loss of demand from China with increased exports to Europe and other regions [10] Price Forecasts - Price forecasts for 1Q25 and 2Q25 TTF have been raised to 15.0/MMBtu, respectively, reflecting a 14% and 11% increase from previous forecasts due to higher-than-expected European gas demand [4][21] - JKM price forecasts for 1Q25 and 2Q25 have also been increased to 15.0/MMBtu, with a 3% and 11% increase from prior forecasts [5][22] Market Dynamics - European gas demand has been buoyed by lower temperatures and a decline in wind and hydro power generation, which fell by 18% and 27% year-to-date, respectively [4][21] - The potential reduction of LNG exports from Indonesia could tighten the global LNG market, although the actual impact may be muted due to high LNG prices dampening domestic demand [24] Long-term Outlook - With new US LNG export terminals coming online from 2025, TTF and JKM prices are expected to enter another down cycle post-2026, similar to the price declines observed in 2019 [3][15] - The long-term implications for US Henry Hub prices are complex, with potential LNG curtailments affecting market dynamics, but a constructive outlook on long-term prices remains [20] Additional Insights - The report highlights the interplay between AI developments and energy demand, suggesting that advancements in AI could lead to increased energy consumption, particularly in natural gas [20] - The report emphasizes the importance of monitoring Indonesia's LNG export policies and their potential impact on global supply dynamics [24] Conclusion - The global LNG market is currently facing significant shifts due to geopolitical factors, changing demand patterns, and evolving supply dynamics. The anticipated tariff on US LNG imports by China is expected to have limited immediate effects on pricing, but the long-term outlook remains uncertain with new export capacities and potential market adjustments.
Global Gas and Power Insights_ China’s tariff on US LNG will reshuffle global trade flows with limited price impacts