SINGAPORE: Prices of Asian spot liquefied natural gas (LNG) inched up this week amid production outages in Asia and Europe, but were still hovering at nearly one-year lows on overall tepid demand.
The average LNG price for June delivery into north-east Asia was at $11.80 per million British thermal units (mmBtu), estimated industry sources, up from $11.50/mmBtu last week which were its lowest levels since mid-May.
There are limited buyers for prompt cargoes, with Chinese and Indian importers taking a back seat as prices are above $11.00/mmBtu, said Argus head of LNG pricing Martin Senior, adding that South Korea is currently the main spot buyer in Asia.
“South Korean demand has stayed strong, with stocks held by the country’s state-owned Kogas last heard to be around 20 percent full, which has prompted buying interest not only from Kogas, but also from Komipo, Kospo and Prism,” he said.
“Spot prices are below Kogas’ domestic tariff, meaning it can be profitable for private importers to buy cargoes.”
On supply, the situation remains healthy despite the recent outage at Petronas’ Bintulu LNG complex, said Siamak Adibi, director for gas and LNG supply analytics at FGE.
Global LNG: Asian spot prices hold at 1-year low amid supply disruptions
Equinor’s Hammerfest terminal, Europe’s largest LNG export facility, also went offline on Tuesday for planned annual maintenance until July 19.
Exports from Venture Global’s Plaquemines plant in the U.S. have reached 1 million tons per month, while BP has loaded its first cargo from the Greater Tortue Ahmeyim project offshore Mauritania and Senegal, said Adibi.
“We also expect the startup of LNG Canada from mid-year and a ramp-up in supply from Corpus Christi,” he added, referring to Cheniere Energy’s plant in the U.S.
In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker price benchmark for cargoes delivered in June on an ex-ship basis at $10.49/mmBtu on April 24, a $0.70/mmBtu discount to the June gas price at the Dutch TTF hub.
Argus assessed the price for June delivery at $10.58/mmBtu. Spark Commodities assessed the May price at $10.376/mmBtu.
While Europe’s gas demand has started to fall due to a seasonal trend, concerns surrounding storage injections for summer remain, said Florence Schmit, energy strategist at Rabobank London.
“The winter premium to summer contracts is still only trading at around 0.50 euros per megawatt hour, which is not enough to incentivize full injections,” she said.
“What’s more, the EU’s Russian fuel phaseout roadmap promises to squash any expectation of returning Russian pipeline supplies, driving European buyers further towards seaborne imports.”
In LNG freight, Atlantic rates rose to $35,750/day on Friday, while Pacific rates slipped to $22,250/day, said Spark Commodities analyst Qasim Afghan.
Despite pointing to Asia earlier this week, the U.S. front month arbitrage to north-east Asia via the Cape of Good Hope has closed out, now marginally pointing to Europe, he added.
