Analysts predict further price drop for LNG in Asia

(Reuters; Aug. 31) -Asian liquefied natural gas prices could drop 25 percent in coming months as new supply, falling demand and weaker oil prices put it on par with iron ore and coal as the worst performing commodity of recent years. Asia's LNG market has already fared worse than slumping oil markets, with spot prices down 60 percent since 2014 to $8 per million Btu, ending half a decade of high prices. Analysts and traders said Asia LNG prices could fall to $6, representing a 70 percent drop since 2014’s peak.

Research group Energy Aspects estimates Asian LNG imports fell 8.5 percent in the first half of 2015 from the same time last year, as the region's economies slow. Add to the mix El Nino, which usually means milder winters in northern Asia, and a unique cocktail for falling prices may appear. "The traditional power houses in north Asia are all showing signs of (demand) weakness at a point when there is lots of supply coming on to the market," said Neil Beveridge of Bernstein Research.

China's LNG imports have slumped from double-digit growth in recent years to a 3 percent slip in the first half of 2015 from a year earlier. For Japan, the world's top LNG importer, the restart of its nuclear power plants is eating away at LNG's market share. Imports into South Korea have also fallen due to a slowing economy and rising nuclear power output. The slowing demand comes just as output soars, particularly with new plants coming online in Australia and the U.S. next.