KUALA LUMPUR: Asian spot liquefied natural gas (LNG) prices were little changed this week, as ample inventories and mild weather capped demand from East Asian buyers.
The average LNG price for March delivery into north-east Asia rose slightly to $14.00 per million British thermal units (mmBtu), industry sources estimated.
“Demand in Asia remains tepid, with East Asia demand relatively constrained amidst warmer-than-usual weather,” said Pang Lu Ming, Rystad Energy senior analyst, adding that local forecasts indicated that South Korea and Japan would see above-normal temperatures through to early and mid-February.
While southern China will also experience warmer-than-normal temperatures in coming days, colder temperatures will be seen in parts of the north, said Pang.
East Asian inventories remain ample.
“Activity from Japanese players remains subdued, implying sufficient winter inventories for existing forecasts,” Pang added, saying South Korean and Chinese players also continued to report sufficient inventories for winter.
Global LNG: Asian spot LNG slips amid healthy stocks, weak demand
In Europe, 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 $14.589/mmBtu on Jan. 23, a $0.37/mmBtu discount to the March gas price at the Dutch TTF hub.
Argus assessed the price at $14.61/mmBtu, while Spark Commodities assessed the February price at $14.594/mmBtu.
Natasha Fielding, head of European gas, LNG and biomass pricing at Argus, noted European delivered LNG prices had increased their premium over northeast Asian markets, pointing to storm disruption to U.S. loadings and higher summer restocking demands following a German proposal to subsidise summer injections.
Freeport LNG also closed its export plant in Texas on Tuesday due to a power feed problem during a winter storm.
The European premium has further incentivised firms to ship uncommitted LNG cargoes in the Atlantic basin to Europe instead of Asia, and could start to pull Middle Eastern supply away from Asia too, Fielding added.
LNG freight rates fell to record lows, with Atlantic rates dropping for a third straight week to $9,000/day on Friday driven by an influx of newly built vessels and the directing of U.S. spot cargoes to Europe, said Spark Commodities analyst Qasim Afghan.
Pacific rates fell to $15,500/day.
The U.S. arbitrage to northeast Asia via the Cape of Good Hope for February widened, again indicating that U.S. cargoes have an incentive to deliver to Europe, Afghan added. He also noted that the Qatar front month arbitrage to Northeast Asia had closed out for the first time in almost two years, also incentivising deliveries to Europe over Asia.
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