HomeNewsAsia spot LNG prices fall to 7-mth low as stocks remain plentiful

Asia spot LNG prices fall to 7-mth low as stocks remain plentiful

1/12/2024

(Reuters) - Asian spot LNG prices slid for an eighth consecutive week to hit their lowest levels in seven months, as healthy storage levels in both Europe and northeast Asia continued to weigh on prices.

The average LNG price for February delivery into north-east Asia <LNG-AS> dropped nearly 10% to $10.10 per million British thermal units (mmBtu) from $11.20 last week, industry sources estimated, its lowest level since June 9.

"Despite colder weather arriving and forecast to continue in Europe, the slide in flat price gas markets has continued as stocks remain healthy for this point in heating season," said Dominic Gallagher, head of LNG broking at Tullett Prebon.

Lower LNG prices have prompted Asian importers, largely from China and India, to snap up spot cargoes this week, though Chinese demand may cool around the Lunar New Year holiday period in mid-February.

LNG stocks held by major power utilities in Japan were at 2.51 million metric tons as of Jan. 7, according to data from the country's ministry of economy, trade and industry. This is 24% above the five-year average from 2018-22 for the end of January, according to Rystad Energy.

The consultancy also estimated that LNG inventories in South Korea remain high at 5.6 million metric tons as of end-December, above 4.4 million metric tons seen in December 2022.

In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in February on an ex-ship (DES) basis at $9.071/mmBtu on Jan. 11, a $0.85/mmBtu discount to the February gas price at the Dutch TTF hub.

Argus assessed the price at $9.10/mmBtu, while Spark Commodities assessed it at $9.081/mmBtu.

"Despite the cold weather in Europe, natural gas prices continued to ease as investors are confident that the cold spell will be over soon, and that inventories are well filled to meet the rest of the winter demand," said Hans Van Cleef, chief energy economist at PZ - Energy.

"If there are no new surprises from the demand side, meaning an unexpected extra period of extreme cold weather, the focus will shift soon to the start of the filling season."

On spot LNG freight rates, Atlantic rates were estimated at $83,500/day on Friday, while Pacific rates were at $66,000/day, said Qasim Afghan, an analyst at Spark Commodities.

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