Global LNG prices to remain capped beyond 2020: Moody’s

According to Moody’s report, new global supply will jump 44 percent by 2020 to 455 mtpa versus 2015 as LNG construction projects in Australia, the US and Russia, costing more than a quarter of a trillion dollars to build, come online. (Reuters)
Updated 27 February 2017
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Global LNG prices to remain capped beyond 2020: Moody’s

JEDDAH: Global prices of liquefied natural gas (LNG) are expected to remain constrained beyond 2020 as a wave of fresh supply capacity comes online at a time when demand from the world’s largest importers is weakening, said a report issued by Moody’s Investors Service.
Imports into Japan, the world’s biggest market, which consumes over one-third of global LNG, will fall to 80 million tons per annum (mtpa) by 2020, a 9 percent reduction from its 2014 record, as nuclear power production slowly restarts. Demand from Korea, the world’s second-largest consumer, will be flat over this period.
“Strong LNG demand growth from China, India and new markets will not be enough to absorb the fresh supply capacity coming online, particularly with demand falling in the largest importing countries, Japan and Korea. The market will not rebalance until the early years of the next decade, when global demand and LNG import infrastructure catches up with supply,” said Tomas O’Loughlin, a vice president — senior credit officer at Moody’s.
According to Moody’s report, new global supply will jump 44 percent by 2020 to 455 mtpa versus 2015 as LNG construction projects in Australia, the US and Russia, costing more than a quarter of a trillion dollars to build, come online. These projects were boosted by a spike in demand from Japan following the 2011 tsunami and subsequent nuclear shutdown, as well as abundant US shale gas supplies, the report added.
“Until the market rebalances, investment returns for developers of Australian projects will be weak and US LNG offtakers will struggle to recover all of their liquefaction costs,” said O’Loughlin.
Global oversupply will continue to expand, peaking at around 55 mtpa in 2019. During this period, significant volumes of US LNG could be destined for Europe. Moody’s expects that global LNG demand growth will continue to be robust, boosted by low prices, environmental concerns and the build out of infrastructure in new markets allowing the import of greater LNG volumes. This demand growth, coupled with a pause in supply capacity development, will allow the market to rebalance in the early 2020s.


Pompeo says China is engaging in ‘predatory economics 101’

Would China have allowed America to do to it what China has done to America asked US Secretary of State Mike Pompeo. (AP)
Updated 18 June 2018
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Pompeo says China is engaging in ‘predatory economics 101’

  • He said China’s recent claims of “openness and globalization” are “a joke.”

DETROIT: China is engaging in “predatory economics 101” and an “unprecedented level of larceny” of intellectual property, Secretary of State Mike Pompeo told a business audience Monday.
Pompeo made the remarks at the Detroit Economic Club as global markets reacted to trade tensions between the US and China. Both nations started putting trade tariffs in motion that are set to take effect July 6.
He said China’s recent claims of “openness and globalization” are “a joke.” He added that China is a “predatory economic government” that is “long overdue in being tackled,” matters that include IP theft and Chinese steel and aluminum flooding the US market.
“Everyone knows ... China is the main perpetrator,” he said. “It’s an unprecedented level of larceny.”
“Just ask yourself: Would China have allowed America to do to it what China has done to America?” he said later. “This is predatory economics 101.”
The Chinese Embassy in Washington did not immediately respond to a request for comment.
Pompeo raised the trade issue directly with China last week, when he met in Beijing with President Xi Jinping and others.
“I reminded him that’s not fair competition,” Pompeo said.
President Donald Trump has announced a 25 percent tariff on up to $50 billion in Chinese imports. China is retaliating by raising import duties on $34 billion worth of American goods, including soybeans, electric cars and whiskey. Trump also has slapped tariffs on steel and aluminum imports from Canada, Mexico and European allies.
Wall Street has viewed the escalating trade tensions with wariness, fearful they could strangle the economic growth achieved during Trump’s watch. Gary Cohn, Trump’s former top economic adviser, said last week that a “tariff battle” could result in price inflation and consumer debt — “historic ingredients for an economic slowdown.”
Pompeo on Monday described US actions as “economic diplomacy,” which, when done right, strengthens national security and international alliances, he added.
“We use American power, economic might and influence as a tool of economic policy,” he said. “We do our best to call out unfair economic behaviors as well.”