SINGAPORE: Asian spot liquefied natural gas prices (LNG) slipped this week, extending declines as strong inventory levels and ample year-end cargo supply muted buying activity.
The average LNG price for December delivery into north-east Asia was $30 per million British thermal units (mmBtu) this week, down $1, or 3.2%, from the previous week, industry sources estimated.
“Given fairly adequate storage in north-east Asia and ample cargo supply booked for November and December deliveries, buyers in the regions have seen little urgency to buy additional cargoes at the moment,” said Ryhana Rasidi, gas and LNG analyst at data analytics firm Kpler.
“Buyers are also likely monitoring the weather for this winter, but there hasn’t been much rush to enter the spot market for now.”
Asian buyers have been stockpiling on supplies of the super-chilled fuel ahead of the peak winter power and gas demand season, though unexpected supply disruptions or a cold snap could lead to a spike in demand.
Global LNG: Asia prices ease slightly, winter restocking to limit further decline
But analysts at Refinitiv said new COVID restrictions in China could mute demand there, meaning more supply for Europe.
In Europe, S&P Global Commodity Insights assessed LNG prices on a delivered ex-ship (DES) basis into northwest Europe (NWE) at $28.222/mmBtu on Oct. 27, a discount of $10.50/mmBtu to December gas price at the Dutch TTF gas hub.
This comes amid high storage levels and as LNG cargoes wait to offload in Europe, which have lead to TTF prices to trade at a discount to JKM, said Kpler’s Rasidi, referring to the benchmark Japan-Korea-Marker price for LNG.
“For the first time in a while, we have seen Asia being the premium leader over Europe,” said Toby Copson, global head of trading and advisory at Trident LNG.
“While not enough to be an enticing arbitrage, it does show that we are slowing on demand across both basins when typically an aggressive bid period for procurement.”
Dozens of ships carrying LNG have been circling off the coasts of Spain for weeks, unable to secure slots to unload their cargoes as plants that convert the fuel back to gas are operating at maximum capacity.
They are likely to stay there until late November in anticipation of a rise in European gas prices, industry sources said.
The high number of LNG cargoes held offshore has tied up much shipping capacity, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
“This has left firms struggling to secure vessels to sell U.S. or West African cargoes into north-east Asia instead of Europe, even when there have been much higher prices available in that region,” he added.
For spot LNG freight, rates in both the basins fell with Pacific rates easing $46,000 to $426,000 per day, and Atlantic rates declining almost $10,000 to $472,750 per day, according to Eleni Balomenou, analyst at Spark Commodities.
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