SINGAPORE: Asian spot liquefied natural gas (LNG) prices slipped this week to a three-month low, as tepid demand in the region persists and Europe continues to attract Atlantic basin cargoes.
The average LNG price for April delivery into northeast Asia was at $13.40 per million British thermal units (mmBtu), industry sources estimated.
The average price for May delivery was estimated at $13.20/mmBtu.
“Japanese demand has been muted, with some Japanese utilities selling cargoes rather than buying,” said Martin Senior, Argus head of LNG pricing, adding that utilities have healthy stockpiles despite the recent cold weather as inventories were high going into winter.
LNG inventories held by major Japanese electric utilities were at 1.79 million metric tons as of March 9, higher than the 1.48 million tons at end-March last year, industry ministry data showed.
South Korean demand, however, has picked up with buyers purchasing cargoes over the past week to replenish stocks after a late-winter cold spell, said Senior.
While Asian LNG demand remains weak, with March imports expected to end at similar levels to February, Europe’s LNG shipments have remained high, with total imports likely to be just shy of 12 million tons by the end of March, said FGE analyst Siamak Adibi.
“Norway’s pipeline supply is nearly maxed out, and withdrawals from storage have remained high due to higher gas consumption in the residential, commercial, and power sectors, primarily driven by weather conditions,” he said.
“The main concern in the market remains Europe’s low underground gas inventories. As a result, LNG imports are expected to remain elevated to balance the market in coming months.”
The market is also focused on comments from Russian President Vladimir Putin, who, amid talk of a possible ceasefire to the conflict in Ukraine, mentioned possible energy cooperation between the U.S. and Russia, and a gas pipeline for 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 $12.411/mmBtu on March 13, a $0.55/mmBtu discount to the April gas price at the Dutch TTF hub.
Argus assessed the price for March delivery at $12.51/mmBtu, while Spark Commodities assessed it at $12.829/mmBtu.
Meanwhile, the U.S. arbitrage to northeast Asia via the Cape of Good Hope widened for the first time in almost two months, incentivising U.S. cargoes to deliver to Europe, said Spark Commodities analyst Qasim Afghan.
In the LNG freight market, Atlantic rates rose this week to $25,750/day on Friday, the highest in four months, while Pacific rates gained to $19,750/day, he added.
