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Severe Asian heat spurs LNG demand ahead of summer season

Severe temperature levels across Asia are increasing liquefied gas (LNG) need in the area as importers seek cargoes ahead of summer season, with imports in South Asia hitting records.

This might tighten offered supply and further lift Asian spot << LNG-AS > rates that have currently gained a third because April, with heatwaves across South and Southeast Asia boosting air-conditioner use and other cooling need. Costs are now at a near six-month peak at $12 per million British thermal units ( mmBtu) and are expected to stay raised.

Area costs are now driven by Asian need. Temperatures in South Asia are increasing due to a heatwave, increasing power need, stated Siamak Adibi, primary expert at energy consultancy FGE.

While China might still see lower demand compared to its record breaking shipments in 2021, need from India and the rest of Asia has made up for any drop-off, Adibi stated.

Parts of South and Southeast Asia saw extreme heat and record temperature levels in April and May, increasing electrical energy usage for cooling and straining power products. In India on Thursday, a minimum of 15 individuals died of believed heatstroke in the eastern states of Bihar and Odisha.

South Asian LNG imports rose almost 20% from a year previously to 3.8 million metric loads in May, according to analytics firm Kpler. India saw its greatest import levels ever for May at 2.4 million tons, while Bangladesh LNG volumes struck an all-time monthly record at 0.6 million loads, according to Kpler data.

New importers the Philippines and Vietnam, which began taking LNG shipments last year, have actually also bumped up their purchases. Vietnam got 3 freights in April and May for power generation, while buyers in the Philippines shipped 9 freights up until now this year versus 11 for all of in 2015.

Increasing need for cooling is set to continue as Northeast Asia enters its summertime. Japan's meteorological agency projection likely higher-than-average temperature levels from June to August, and China's energy regulator cautioned power supply will be tight in some regions the next few months in the middle of growing usage.

Various weather forecasts suggest Northeast Asia may experience hotter-than-normal weather condition from May, stated Energy Aspects expert Min Na in a note, adding that restocking demand for LNG in Asia will be higher year-on-year this summer season.

We anticipate an overall restocking need of 2.4 million loads this summer throughout Japan, South Korea and Taiwan, up by 2.3 million tons year-on-year and 0.1 million tons above the five-year average.

Japan federal government data showed LNG stockpiles by energies at 2.06 million loads since May 26, listed below the five-year average for the period, as Tokyo is currently experiencing heat.

South Korean power generation company Korea Midland Power Co.

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(source: Reuters)