India's liquefied natural gas imports jumped to their highest level in nearly six years, with deliveries climbing 40% year-on-year to 2.6 million tons in August, according to ship-tracking data compiled by Bloomberg. This represents the highest monthly level since October 2020, as reported by The Hindu BusinessLine. The surge comes despite soaring spot prices, with buyers now purchasing some of the most expensive LNG shipments since 2022 when Russia's invasion of Ukraine disrupted global gas markets. The import surge is confounding the market, as India usually reduces LNG purchases when spot prices spike.
Indian companies have recently purchased some of their most expensive spot LNG shipments since 2022, with Gujarat State Petroleum Corp. purchasing an LNG shipment for September delivery at $24 per million British thermal units, more than double pre-war levels, as reported by The Hindu BusinessLine. This represents a significant increase from pre-war levels, with spot prices having more than doubled from pre-war levels. 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 purchases, but the recent surge demonstrates the critical nature of LNG replacement needs.
Most of the recent buying was driven by fertilizer producers, which are backed by government subsidies, according to Energy Aspects Ltd senior global LNG analyst Kesher Sumeet, as reported by The Hindu BusinessLine. Additionally, some city-gas distributors were pushed to spot LNG after the government limited domestic natural gas supplies, while some industries had to find replacements for propane. The surge reflects buyers hoarding LNG as the outlook for the reopening of the Strait of Hormuz — previously a conduit for a fifth of global supply — remains unclear. The Iran war has disrupted shipments that were previously flowing through the Strait, forcing buyers to seek alternative sources.
The jump in Indian buying is curbing supplies to Europe, which has been struggling to refill its inventories since the effective closure of Hormuz, as reported by The Hindu BusinessLine. The US was India's top LNG supplier in August, providing over a third of deliveries, according to ship data, representing a significant shift from last year when Qatar was the country's biggest source of LNG. This supply chain realignment reflects the global impact of the Iran war on LNG trade patterns, with buyers scrambling to secure alternative sources as traditional supply routes face disruption.
