Asian spot liquefied natural gas (LNG) prices hit a two-month high this week, tracking a rally in European gas prices, despite subdued Asian demand due to healthy inventories.
The average LNG price for March delivery into north-east Asia (LNG-AS) was at $14.90 per million British thermal units (mmBtu), the highest since early December and up from $13.80/mmBtu last week, industry sources estimated.
“Bullish prices are expected to continue in the week ahead supported by colder weather and supply disruptions at the 16.3 mtpa (million tonnes per annum) North West Shelf in Australia and the 2.5 mtpa Donggi Senoro LNG in Indonesia,” said Go Katayama LNG and natural gas analyst at Kpler.
“We continue to see demand uptick in north-east Asia remaining limited due to healthy inventories in Japan and South Korea and March temperature forecasts showing a 50-60% chance of above normal temperatures,” Katayama said.
Generally, the Asian market still seems to be relaxed with Chinese traders away until next week because of the Lunar New Year, said Klaas Dozeman, market analyst at Brainchild Commodity Intelligence.
“Asia weather forecasts are showing just short spells of cold. Storage levels seem to be quite well (full) over there with China exporting a couple of cargoes to Bangladesh. Unless a major cold episode happens in March winter demand seems to have vanished before it emerged,” Dozeman added.
In Europe, gas prices have remained near 15-month highs this week as colder weather stoked demand and lower storage levels buoyed the market.
“Europe is still hungry enough for LNG, with colder weather compared to the last couple of years, increasing stock withdrawals for the past two weeks and also for the coming couple of weeks. It means that storages need to be refilled with an increasing number of LNG tankers in a possible time-compromised window as long as major withdrawals continue,” Dozeman said.
Five Pacific basin cargoes from countries which have not delivered to Europe since at least 2023 are en route to the continent, with one transiting the Suez Canal for the first time since January 2023 and one carrier heading from as far away as Australia to France – the first such delivery to Europe since late 2022, said Martin Senior, head of LNG pricing at Argus.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in March on an ex-ship (DES) basis at $15.961/mmBtu on February 6, a $0.55/mmBtu discount to the March gas price at the Dutch TTF hub. This marks the highest price level seen since Oct. 27, 2023.
Argus assessed the price at $16.09/mmBtu, while Spark Commodities assessed the price for February delivery at $16.008/mmBtu.
The U.S. arbitrage to north-east Asia via the Cape of Good Hope for February has narrowed this week but still signals that U.S. cargoes are incentivised to deliver to Europe rather than Asia, said Spark Commodities analyst Qasim Afghan.
Global LNG freight rates continue to be at record lows, with Atlantic rates at $3,750/day on Friday and Pacific rates at a fresh record low of $9,750/day, Afghan added.
Source: Reuters
