GLOBAL LNG-Asian spot prices rise on summer demand for air-conditioning units

RIO DE JANEIRO: Asian spot prices for liquefied natural gas (LNG) rose this week, as buyers stocked up the power-generating fuel on anticipation that a warmer-than-usual summer will spur demand for air-conditioning units.

The average LNG price for July delivery into Northeast Asia was estimated at about $10.30 per million British thermal units (mmBtu), up 70 cents from the previous week, industry sources said.

Temperatures in Beijing, Tokyo, Seoul, and Shanghai are expected to be higher than average over the next two weeks, weather data from Refinitiv Eikon showed, which could increase gas demand for cooling.

Spot LNG prices seasonably peak in the northern hemisphere winter and summer periods of high demand for heating and air-conditioning, respectively, and should remain under pressure throughout the year on high demand, consultancy Wood Mackenzie said.

"Winter will see market dynamics getting increasingly tighter," Robert Sims, head of LNG Short-Term, Gas and LNG Research at Wood Mackenzie, said in a note.

Supply coming from the United States, which hit historical levels last month, decreased this week with export plants entering seasonal maintenance, adding to a strained market.

Trafigura sold a cargo to Vitol for delivery between July 17 and July 21 in Tianjin, China, with a premium of $1.45 per mmBtu over European LNG prices, according to traders. Premiums over $1 per mmBtu tend to compensate for the longer trip costs to Asia, attracting ships to head East.

Buyers, nevertheless, were resistant to pay for cargoes offered well above the $10 per mmBtu range, a trader said.

Petronas sold two cargoes for delivery between July 7 and 8, and July 23-24 to North Asia for slightly more than $10 per mmBtu, a trader said.

Guangzhou Gas Group purchased a cargo for June 27 delivery to Dapeng terminal at around mid-$10 per mmBtu, industry sources said.

Japan's Shizuoka Gas bought a cargo for second-half September loading from Papua New Guinea LNG plant at around $10.30 per mmBtu, an industry source said.