LNG prices will likely come under downward pressure

As Donald Trump won the US Presidential election, sources forecasted that the LNG industry would change in many aspects. The approvals of new LNG projects in the US that the Biden administration paused were expected to be lifted in the near future. Along with an increase in the export volume from the US, many sources speculated that LNG supply would become abundant from about 2026. As a result, the LNG market would come under downward pressure from the mid- and long-term perspective, according to these sources. Nevertheless, LNG from the US has low calorific value, so called lean. Therefore, some end-users such as Japanese city gas companies hesitate to receive them. Considering this, a Japanese company commented, "Many available cargoes from the US do not directly mean the drop in the DES Northeast Asia market."

LNG might be excluded from trade war between US and China

On the other hand, with Trump mentioning tariffs at 60% against import goods from China, sources were concerned that the trade war for LNG between the US and China, the world top exporter and importer of LNG, might occur as well. Chinese importers, however, had signed a lot of long-term contracts with US suppliers in the last couple years. Further, the economic growth in China was slowing down in recent years. Hence, a Japanese trader pointed out that the two countries might not include LNG in a target of the high tariff.

Worries about heightened geopolitical risk with Trump diplomacy

In the Middle East, Donald Trump becoming the next U.S. President might heighten a geopolitical risk. Trump is well-known for his pro-Israeli and anti-Iranian stance. "Trump could agree with Israel for striking Iranian nuke sites and energy infrastructure," said a Japanese company. If that happens, "The risk of closure of the Strait Hormuz as well as Israeli natural gas fields being attacked could emerge with retaliatory action by Iran" (the same source). The Trump diplomacy could affect ceasefire talks in Gaza, as well.

Port Arthur phase 2 to acquire export permits to non-FTA countries early next year

US Sempra announced that the development of the 13.00 mil mt/year Port Arthur project phase 2 in Texas has been under progress smoothly. The project was expected to file for admission to the US Department of Energy (DOE) for exports to the non-Free Trade Agreement (FTA) countries with the U.S, because Donald Trump becoming the U.S. President would allow them to acquire export permits easily. Trump's victory also led to the view that the ban on new LNG projects would be lifted soon among market participants. More players guessed a possible increase in LNG exports from the US as well as relaxing the sanctions on Russia, including the 19.80 mil mt/year Arctic 2 project under the Trump administration.

Bearish outlook for natural gas prices in Europe

As for the influences on the Ukrainian war and natural gas market, a Japanese company said, "It is difficult to predict as of now." While Trump has commented on his intentions to end the war, establishing the agreement among Ukraine, western countries, and Russia would be difficult. Nevertheless, more players had views that the Netherlands' TTF natural gas market would face downward pressure going forward. A Japanese trader said, "The TTF market will be affected much more by the political situation in Europea rather than that in the Middle East. In case the supply volume of Russian natural gas recovers, TTF prices will more likely drop."