The import surge is confounding the market, as India usually reduces LNG purchases when spot prices spike.
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India’s liquefied natural gas imports jumped in August to the highest in nearly six years, defying higher spot prices as fertilizer and fuel distributors sought to replace shipments disrupted by the Iran war.
Deliveries to the nation climbed 40 per cent year-on-year to 2.6 million tons, according to ship-tracking data compiled by Bloomberg. That’s the highest monthly level since October 2020, the data shows.
The import surge is confounding the market, as India usually reduces LNG purchases when spot prices spike. Indeed, in the early days of the war, the country bought less as the government rationed fuel and curbed supply to some fertilizer producers.
However, LNG purchases are now rebounding, despite spot prices having more than doubled from pre-war levels. Buyers now appear to be hoarding LNG as the outlook for the reopening of the Strait of Hormuz — previously a conduit for a fifth of global supply — remains unclear.
Most of the recent buying was to feed the requirements of fertilizer producers, which are backed by government subsidies, said Kesher Sumeet, senior global LNG analyst at Energy Aspects Ltd. Adding to the demand, some city-gas distributors were pushed to spot LNG after the government limited domestic natural gas supplies, he added, while some industries had to find replacements for propane.
Indian companies have recently bought some of their most expensive spot LNG shipments since 2022, when Russia’s invasion of Ukraine upended the global gas market and sent prices surging. Late last week, Gujarat State Petroleum Corp. purchased an LNG shipment for September delivery at $24 per million British thermal units, traders said, more than double pre-war levels.
The jump in Indian buying is curbing supplies to Europe, which has been struggling to refill its inventories since the effective closure of Hormuz. The US was India’s top LNG supplier in August, providing over a third of deliveries, ship data shows. That’s a big shift from last year, when Qatar was the country’s biggest source of LNG.
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