HomeNewsAsian LNG spot prices fall to lowest level since July 2021

Asian LNG spot prices fall to lowest level since July 2021

2/24/2023

Asian spot liquefied natural gas (LNG) prices eased this week, extending declines to its lowest since July 2021, as demand from key buyers in northeast Asia remain weak.

The average LNG price for April delivery into northeast Asia <LNG-AS> was at $15 per million British thermal units (mmBtu), industry sources estimated, down $1, or 6.3%, from the previous week.

Asia's spot LNG prices have been trending downward since mid-December, and have lost 46% since the start of the year.

"Asian LNG prices have indeed been fairly flat with a slight downtrend this week ... returning to a discount against the TTF," said Ryhana Rasidi, gas and LNG analyst at data and analytics firm Kpler, referring to Europe's gas price at the Dutch TTF hub.

"We see this pressure on prices due to the high stock levels, ample spot supply availability and limited buying interest from the northeast Asian buyers."

Amid the lack of spot market demand from northeast Asia, China Gas Holdings announced on Friday that it had signed two 20-year LNG supply contracts with U.S. exporter Venture Global, for a total supply of two million tonnes per year.

Earlier this month, China's Unipec also secured a deal with Oman LNG for around one million tonnes of LNG per year for four years starting 2025.

"China has been active on a forward looking basis, securing more long-term volume," said Toby Copson, global head of trading at Trident LNG.

"This is well positioned to take advantage of current weakness, while overall demand appears lacklustre."

Lower spot prices however have continued to encourage buying interest from south Asia. Earlier this week, India's largest gas distributor GAIL (India) Ltd issued a buy tender seeking three LNG cargoes for delivery from March to May.

Petronet LNG, India's top gas importer, also issued a buy tender this week seeking one LNG cargo for delivery in May.

"There is little interest in purchasing spot cargoes emanating from South Korean and Japanese buyers," said Samuel Good, head of LNG pricing at commodity pricing agency Argus.

"Instead, we're seeing several south Asian buyers coming into the market, incentivised by the much lower spot prices compared with most of 2022 and earlier this year."

In Europe, S&P Global Commodity Insights assessed its daily north-west Europe LNG Marker (NWM) price benchmark for cargoes delivered in April on an ex-ship (DES) basis at $14.088/mmBtu on Feb. 23, a historically high discount of $1.575/mmBtu to the April gas price at the Dutch TTF gas hub, said Ciaran Roe, global director of LNG.

"The major European gas hubs remained above LNG prices this week in a pattern that has sustained since mid-January," he said.

Dutch wholesale gas prices edged higher on Friday on expectations of increased demand for heating, as temperatures turn cooler.

"The wider scope for a cold snap in northwest Europe and the Iberian peninsula around the turn of the month was to some extent offset earlier in the week by stronger Norwegian output," added Argus' Good, who assessed the northwest Europe delivered LNG prices for April at $13.60/mmBtu on Feb. 23.

Meanwhile, LNG spot freight rates gained this week, "driven by increased spot vessel demand in the Pacific basin," said Henry Bennett, global head of pricing at Spark Commodities.

Atlantic rates rose on the week to $59,000/day on Friday, while Pacific rates also increased to $78,500/day.

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