Asian Spot LNG Prices Slip to Two-year Low

By Marwa Rashad
Friday, May 19, 2023

Asian spot liquefied natural gas (LNG) prices slipped to their lowest level in two years on weak demand and high inventories, while European LNG prices also fell below the $10 mark amid healthy stock build and limited need for additional supply.

The average LNG price for July delivery into northeast Asia was down 6.6% from the previous week at $9.8 per million British thermal units (mmBtu), the lowest since May 2021, industry sources estimated.

"Prices continue to linger sub $10 as general demand remains lacking, opening up interest from some Chinese industrial buyers and Japanese utilities who have taken cargoes while favourable pricing exists," said Toby Copson, global head of trading at Trident LNG.

"The forwards curve shows healthy contango (where the futures price is higher than the spot price), so we expect demand should pick up as the weather gets more extreme. August bookings should be when we see more activity from the bigger players," he added.

Leo Kabouche, LNG market analyst at research consultancy Energy Aspects, said South Asian buyers continued to dominate spot tenders, with a heatwave in Thailand that is pressuring the country’s hydropower output likely to generate incremental demand.

"The direction of spot prices remains largely dependent on Chinese demand, which has the greatest potential to absorb a global glut of LNG, but has rebounded only modestly year-to-date," he added.

Samuel Good, head of LNG pricing at commodity pricing agency Argus said that the contango present in northeast Asian through late summer and early winter suggests there could be a price incentive to market U.S. and West African cargoes to northeast Asian buyers later this year, though the question is whether northeast Asian demand could be sufficient to absorb a significant swathe of Atlantic supply.

Good added that cargo availability remains ample and is set to remain strong in the Atlantic basin despite planned maintenance in the United States, Oman and Qatar, and an ongoing unplanned downtime at Norway’s Hammerfest.

In Europe, Hans Van Cleef, chief energy economist at PZ - Energy Research & Strategy said that the economic driver to sell the non-contracted LNG to Europe is diminishing due to lower gas demand and Europe's high inventories that are 65% full which will not be a problem in the near term.

"However, it could form a risk for the longer term if demand starts to pick up due to economic rebound after a few months of contraction, or due to extremely hot summer or cold winter, or if other consumers in the world start to buy this LNG which would lower the availability of LNG towards Europe in times when it is necessary," he added.

S&P Global Commodity Insights assessed its daily north-west Europe LNG Marker (NWM) price benchmark for cargoes delivered in July on an ex-ship (DES) basis at $8.427/mmBtu on May 18, a $1.220/mmBtu discount to the July gas price at the Dutch gas TTF hub, according to Allen Reed, managing editor of Atlantic LNG.

Argus assessed the NWE DES price at $8.25/mmBtu on May 18, a $1.42 discount to TTF gas price.

Spot LNG freight rates weakened further this week, touching new lows since summer 2022, with the Atlantic spot rates falling to $36,000/day on Friday, and the Pacific rates falling to $39,750/day, according to Edward Armitage, an analyst at Spark Commodities.


(Reuters - Reporting by Marwa Rashad; Editing by Alexander Smith)

Categories: LNG

Related Stories

Shell Predicts 60% Rise in LNG Demand by 2040 with Asia Leading the Way

Tokyo Gas Enters LNG Market in Philippines

ADNOC Secures LNG Supply Deal with India's BPCL

Europe's Gas Uncertainty Help Drive Asian LNG Spot Prices Higher

Driven by Oil & Gas, Norway Wealth Fund Approachs $2 Trillion

OPEC+ Passes on Oil Output Increase, Weighs the "Trump Effect"

Sembcorp Signs 10-Year LNG Supply Contract with Chevron

TotalEnergies and Oil India to Jointly Tackle Methane Emissions Issues

Global Offshore Wind Stumbles to the End of '24

Global OTEC Presents OTEC Power Module for Remote Offshore Platforms

Current News

Argentina YPF to Shed Offshore Exploration Projects

Cairn India Might Invest in US Oil Servicing Firms to Increase Production

All Gas from Conrad’s Mako Field to be Sold to Indonesia’s PLN

ORE Catapult and Japan’s FLOWRA to Jointly Advance Floating Wind

Shell Hires Noble’s Drillship for Work in Southeast Asia

Second Hai Long Substation Heads to Project Site Offshore Taiwan

Shell Launches Next Phase of Malaysia's Deepwater Project with First Oil Production

CNOOC Discovers ‘Vast Exploration Prospects’ in China’s Beibu Gulf Basin

China Unveils Plans for New Offshore Wind Farms to Tackle Carbon Emissions

Japan and South Korea Look to Partner Up with US for Alaska Pipeline

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com