Gas prices have been moving slowly but steadily downwards since April. Only the filling of the gas reserves will cause upward price pressure now that the heating season has finally come to an end. However, news of declining Asian LNG imports briefly accelerated the decline.
The price of gas is still creeping down. On April 26, gas traded on the TTF for €38,55. A day later (Thursday, April 27), the gas price was at the highest point of the week and the price of a megawatt hour was €39,04. On Tuesday, March 5, gas traded at the lowest price since July 27, 2021, at €37,74.
In April, the gas price fell slowly but consistently. Now that the month of May has started, there appears to be no change in this pattern. The risk of days that are so cold that the heating has to be turned on will most likely disappear in May. As a result, only filling the gas reserves appears to be causing some structural upward price pressure.
LNG imports are favorable
On Tuesday, March 5, the decline briefly accelerated. That day the price fell by more than €1. The sharp decline followed the news that Asian LNG imports in April were lower than expected. Contrary to analyst expectations, liquefied gas imports from China and Japan fell. In March, Asian major users imported a combined 20,66 million tons of liquefied gas. In March and April, both countries imported more than 22,2 million tons of LNG, according to data from Kpler. Lower imports from China enabled Europe to purchase more LNG for the third month in a row.
This appears to have mitigated the greatest risk for the European gas market for now. The International Energy Agency has been reporting for months that rising Asian LNG imports are making it more difficult for European Union member states to import liquefied gas on a large scale. With the reopening of the Chinese economy, analysts at the agency expect gas consumption by industry in the Asian country to increase significantly, requiring additional LNG imports to meet demand. Last week, the Energy Agency's fears seemed to come true. In March, exports from China increased by no less than 16,9% compared to the previous year. The decrease in Chinese LNG imports can therefore only be interpreted as a windfall for Europe.
The lower imports do not come completely out of nowhere. Industrial gas demand does not appear to be growing fast enough to compensate for lower heating demand as summer approaches. Last week, China released industrial growth figures, which were considerably lower than planned. In the first quarter, Chinese industry grew by only 3,6%. This means that growth is lower than the overall growth of the Chinese economy, which increased by about 5%.