The global LNG market is seen to remain oversupplied for another two years, according to the general outlook expressed by market participants on the first day of the American LNG Forum in Houston. US LNG developers should reckon this outlook, especially those who have not made final investment decisions.
Benchmark prices in Asia and Europe currently reflect oversupply. On Monday, North Asian spot LNG prices fell to a record low of $3.50/MMBtu, driven by weak demand outlook and softer prices in Europe. However, liquefaction activity in the US remained robust thanks to bearish price movement at the US Henry Hub and downtrend in shipping rates which make the forward netback remain profitable.
Market participants anticipate a period of recovery in the market after the two-year oversupply, followed by renewed uncertainty in the mid-2020s. The outlook right now is clouded by the mild weather, Chinese tariffs on US LNG, and the coronavirus outbreak.
The startups of LNG export terminals in the US will determine the future balance in the global LNG market. North America will have 18 active liquefaction projects by 2026, assuming all the current projects advance to construction. These new capacities will make the US the largest LNG exporter in the world.
