Asian LNG Spot Prices Edge Higher Amid Supply Disruptions

Singapore: This week saw a slight increase in the prices of Asian spot liquefied natural gas (LNG), influenced by production halts in both Asia and Europe. However, overall demand remained subdued, keeping prices near their lowest levels in almost a year.

Industry sources estimate that the average LNG price for June delivery to Northeast Asia reached $11.80 per million British thermal units (mmBtu). This marks an increase from the previous week’s $11.50/mmBtu, which represented the lowest prices since mid-May.

Argus’ head of LNG pricing, Martin Senior, noted limited buyer activity for immediate shipments. He mentioned that Chinese and Indian importers are less active due to prices exceeding $11.00/mmBtu. Currently, South Korea stands out as the primary spot buyer in Asia.

He further commented, “South Korean demand has shown resilience, with state-owned Kogas reportedly holding stocks around 20 percent full. This situation has spurred buying interest from Kogas, as well as Komipo, Kospo, and Prism.”

“Spot prices are currently below Kogas’ domestic tariff, potentially creating profitable opportunities for private importers to acquire cargoes.”

Siamak Adibi, director for gas and LNG supply analytics at FGE, stated that the supply situation remains stable, even with the recent disruption at Petronas’ Bintulu LNG complex.

Global LNG Supply Dynamics

Equinor’s Hammerfest terminal, a major LNG export facility in Europe, was taken offline on Tuesday for planned annual maintenance, scheduled to last until July 19.

Adibi noted that exports from Venture Global’s Plaquemines plant in the U.S. have reached 1 million tons per month. BP has also loaded its initial cargo from the Greater Tortue Ahmeyim project, located offshore Mauritania and Senegal.

He added, “We anticipate the startup of LNG Canada around mid-year and an increase in supply from Corpus Christi,” referring to Cheniere Energy’s facility in the U.S.

S&P Global Commodity Insights assessed its daily North West Europe LNG Marker price benchmark for June deliveries on an ex-ship basis at $10.49/mmBtu on April 24, which is a $0.70/mmBtu discount compared to the June gas price at the Dutch TTF hub.

Argus estimated the price for June delivery at $10.58/mmBtu. Spark Commodities assessed the May price at $10.376/mmBtu.

Florence Schmit, energy strategist at Rabobank London, pointed out that while Europe’s gas demand is declining seasonally, concerns about summer storage injections persist.

She explained, “The winter premium over summer contracts is still trading at approximately 0.50 euros per megawatt hour, which is insufficient to fully incentivize injections.”

“Furthermore, the EU’s roadmap to phase out Russian fuel is expected to eliminate any prospects of resuming Russian pipeline supplies, pushing European buyers to rely more on seaborne imports.”

In LNG freight, Spark Commodities analyst Qasim Afghan reported that Atlantic rates increased to $35,750/day on Friday, while Pacific rates decreased to $22,250/day.

He added that while earlier in the week, arbitrage pointed towards Asia, the U.S. front month arbitrage to Northeast Asia via the Cape of Good Hope has now closed, marginally favoring Europe.