Global LNG: Asia spot prices supported by Freeport LNG outage, summer demand
Asian spot liquefied natural gas (LNG) prices held steady this week on the back of support from an outage at U.S. Freeport LNG which saw some cargo cancellations, and as summer weather boosted demand.
The average LNG price for September delivery into north-east Asia was at $12.20 per million British thermal units (MMBtu), industry sources estimated.
Freeport LNG in Texas, south of Houston, halted operations on July 7 before Hurricane Beryl made landfall, causing power outages and infrastructure damage to ports and energy companies.
Freeport said on Monday it planned to restart one processing train this week and the remaining two trains shortly after, but production would be reduced while it continued repairs. Feedgas to the facility rose on Thursday but vessel loading has not resumed, leading to an increasing number of LNG tankers waiting to load.
Analysts say the LNG exporter has cancelled between seven and 10 cargoes as a result.
"About a month's worth of production... has been taken out of the market through cargo cancellations, which has supported prices in recent days," said Martin Senior, deputy head of LNG pricing at Argus.
While it has impacted spot prices, Freeport's outage is expected to be a brief one without causing dramatic shifts in market fundamentals, said Siamak Adibi, director for gas and LNG supply analytics at consultancy FGE. "As long as storage levels remain healthy in Europe and European demand does not increase dramatically, brief outages like the one in Freeport can be managed by swings from other suppliers. For example, Norwegian pipeline supply can ramp up and fill the gap when necessary for now," he said. "The question is how long these outages continue and when they may happen again... These incidents can have very powerful impacts if they occur in winter when withdrawals from storage in Europe increase dramatically."
Summer demand has also seen some importers seeking cargoes for August and September delivery, said Rystad Energy analyst Wei Xiong in a note. Buyers included Japan's JERA, Tohoku Electric and Kansai Electric, and India's GAIL, Indian Oil Corporation and Gujarat State Petroleum.
Thailand's PTT and South Korea's Korea Midland Power also issued tenders seeking LNG supply.
In Europe, gas prices held steady amid strong inventories and expectations of a pick-up in wind speeds towards the weekend. NG/EUS&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in September on an ex-ship (DES) basis at $10.542/MMBtu on July 18, a $0.15/MMBtu discount to the September gas price at the Dutch TTF hub.
Argus assessed the September delivery price at $10.55/MMBtu, while Spark Commodities assessed the August delivery price at $10.297/MMBtu.
On LNG freight, Atlantic rates fell to $79,250/d on Friday, said Spark Commodities analyst Qasim Afghan. Pacific rates, however, rose to $67,250/d.
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