Asian LNG Spot Prices Edge Higher Amid Supply Disruptions

Singapore: This week, spot prices for Asian liquefied natural gas (LNG) saw a slight increase due to production disruptions in both Asia and Europe. However, prices remained near their lowest levels in approximately a year because of persistently weak demand.

Industry sources estimate that the average LNG price for delivery to north-east Asia in June was $11.80 per million British thermal units (mmBtu), a marginal rise from $11.50/mmBtu the previous week, which marked the lowest point since mid-May.

Argus’ head of LNG pricing, Martin Senior, noted that with prices exceeding $11.00/mmBtu, there are few buyers for immediate deliveries, as Chinese and Indian importers are holding back. South Korea is currently the primary spot buyer in Asia.

“South Korean demand has remained robust, with state-owned Kogas reportedly holding stocks around 20 percent full. This has spurred buying interest from Kogas as well as Komipo, Kospo, and Prism,” he stated.

“Spot prices are currently below Kogas’ domestic tariff, which makes it profitable for private importers to procure cargoes.”

According to Siamak Adibi, director for gas and LNG supply analytics at FGE, the supply situation remains stable despite the recent outage at Petronas’ Bintulu LNG complex.

Equinor’s Hammerfest terminal, which is the largest LNG export facility in Europe, also ceased operations on Tuesday for planned annual maintenance that will last until July 19.

Adibi mentioned 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, which is located offshore Mauritania and Senegal.

“We are also anticipating the commencement of LNG Canada around the middle of the year and an increase in supply from Corpus Christi,” he added, in reference 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 evaluated the price for June delivery at $10.58/mmBtu, while Spark Commodities estimated the May price at $10.376/mmBtu.

Florence Schmit, energy strategist at Rabobank London, observed that although Europe’s gas demand has begun to decline due to seasonal trends, concerns about storage injections for the summer persist.

“The premium for winter contracts over summer contracts is still trading at only around 0.50 euros per megawatt hour, which is insufficient to incentivize full injections,” she explained.

“Furthermore, the EU’s roadmap for phasing out Russian fuel is expected to eliminate any possibility of resuming Russian pipeline supplies, which will further encourage European buyers to rely 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 noted that while earlier in the week, indicators pointed towards Asia, the U.S. front month arbitrage to north-east Asia via the Cape of Good Hope has concluded and now marginally favors Europe.