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LONDON: Asian spot liquefied natural gas (LNG) prices remained at high levels this week on a summer demand pickup in Asia and uncertainty over the Nord Stream 1 pipeline’s return to operations after maintenance ends on July 21.

The average LNG price for August delivery into north-east Asia was estimated at $40.50 per million British thermal units (mmBtu), down $0.50 or 1.2%, from the previous week, industry sources said.

The average price for September delivery was estimated at $41.00 per mmBtu, a four-month high and close to record level seen in December at $44.35/mmBtu.

“The LNG market is looking pretty tight for a host of reasons: summer demand in Asia is picking up and there is a heat wave underway in Europe as well as in Texas, but there are plenty of supply issues at the same time,” said Ryan McKay, Commodity Strategist at TD Securities.

Peru LNG, which typically loads five to six cargoes a month, have seen no exports since June 26 due to an outage that will last until late July, according to Refinitiv Eikon data.

Global LNG: Asia spot prices jump amid stronger demand, concerns over Russia

Shell has also told customers it will be unable to supply LNG cargoes from Australia’s Prelude LNG, due to industrial action which has been extended to July 21.

Although China has healthy storage levels, a current heatwave across is stressing the power system and might increase LNG buying. Japan and South Korea are also expected to buy more LNG cargoes for summer, said Mauro Chavez Rodriguez, research director for European gas & LNG markets at Wood Mackenzie.

In Europe, S&P Global Commodity Insights assessed LNG prices on a delivered ex-ship (DES) basis into north-west Europe (NWE) at $41.358/mmBtu on July 14, a discount of $9.90/mmBtu to August prices at the Dutch gas hub, said Ciaran Roe, global director of LNG.

For a standard cargo size into NWE a buyer would be paying $35 million per cargo or so less for LNG than pipeline gas. LNG cargo prices into Europe are trading above North Asia derivative prices, which for September delivery were around $39.80/mmBtu on July 14, Roe said.

“This means that the Atlantic Basin LNG cargoes will almost all remain (there) rather than reaching North Asia, where LNG import volumes are running below the five-year average into major receiving markets: Japan, China, South Korea and Taiwan.”

Spark Commodities, which assessed the spread between DES European LNG prices and Dutch gas (TTF) in September at a discount of $9.45/mmBtu, said that continued constraints on LNG import capacity in NWE and the sharp rises in TTF prices are increasing the value placed on regasification slots.

Woodmac’s Rodriguez estimated industrial gas demand reduction in Europe of over 20% year-on-year in the first half of July, due to the Nord Stream outage, with chemicals, refineries, and non-ferrous metals like ceramics, glass and cement being the most affected.

LNG freight spot rates went down on enhanced vessel availability, with Atlantic rates estimated by Spark Commodities at $44,250 per day and Pacific rates at $49,500 per day on Friday.

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