Asia spot LNG maintains six-week high amid emerging demand
(Reuters) - Asian spot LNG prices were little moved this week, holding on to a six-week high amid emerging spot demand in both southeast Asia and Europe.
The average LNG price for May delivery into northeast Asia LNG-AS rose 1.1% or $0.10, from the previous week to $9.50 per million British thermal units (mmBtu), a level not seen since Feb. 9, industry sources estimated.
The price has hovered between $9 and $10/mmBtu this week, discouraging some Asian buyers from buying spot volumes as prices went back closer to $10/mmBtu, said Masanori Odaka, senior analyst at Oslo-based consultancy Rystad Energy.
Southeast China is set for a hot turn to summer, with daily maximum temperatures forecast to be several degrees Celsius above long-term averages for the coming week, suggesting scope for some early power sector cooling demand, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
Good added that daily highs in northeast China, South Korea and Japan are also forecast to rise above seasonal averages in the coming week or two but are likely to fall short of the heights needed to substantially drive power demand higher.
Market players are keeping a close eye on Japan, where the yen slid to a 34-year low against the U.S. dollar on Wednesday.
"A weaker yen does raise the import price for Japanese utilities for both long-term oil-indexed cargoes and spot purchases, but it is doubtful that it would impede Japan's ability to secure sufficient oil & gas supply to meet domestic demand," an industry source told Reuters.
In Europe, gas prices fluctuated between $8-$9/mmBtu this week, amid strong storage inventories and milder weather forecast.
Rystad's Odaka said suppliers with U.S.-origin LNG are incentivized to send their shipments to Europe rather than Asia due to longer shipping distances, despite Asian spot prices being around $1 higher than in Europe this week.
S&P Global Commodity Insights assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in May on an ex-ship (DES) basis at $8.552/mmBtu on March 27, a $0.25/mmBtu discount to the May gas price at the Dutch TTF hub.
Argus assessed the May delivery price at $8.45/mmBtu, while Spark Commodities assessed the delivery for April at $8.43/mmBtu.
In the United States, the Baltimore bridge collapse is not expected to impact the LNG market, with the nearest LNG terminal, Cove Point LNG, confirming operations are not affected.
Laura Page, manager of gas and LNG insight at data analytics firm Kpler, said that the ballast Maran Gas Vergina arrived at the terminal on March 27 and is currently loading.
"We do continue to monitor activity at Freeport, which is undergoing unplanned maintenance at two of three trains. The plant's LNG exports halved to just one cargo last week and a number of ballast vessels continue to wait outside the port," Page said.
Meanwhile on spot LNG freight, Atlantic rates fell to $46,500/day on Thursday, said Spark Commodities analyst Qasim Afghan. Pacific rates also eased to $48,500/day.
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