Spot Prices of Liquified Natural Gas drop to multi-year lows at $4/mmBtu
Asian liquefied natural gas (LNG) spot prices fell to several year lows on Tuesday as economic growth slows, and new projects launched leads to production ramp up at a higher pace. A milder winter season in Northern parts of Asia has further led to curtailing margins. As per the latest reports, at least one cargo being sold into Northeast Asia was traded below the psychological barrier of $4 mmBTu. Low LNG spot prices are likely to hit companies which procure LNG through long-term contracts, selling on to end-users at market prices. New commercial production in the United States are pressurizing the global LNG prices, which could spur a switch from coal to gas use in Asian countries such as Japan. Indian players like GAIL which are operating LNG cracker units to produce Ethylene and Propylene are likely to benefit from tumbling prices.