Asian spot liquefied natural gas (LNG) prices slipped to a five-month low this week, extending losses that began in mid-November as mild winter weather and high inventories curbed demand.
The average LNG price for February delivery into north-east Asia dipped by 4% to $11.20 per million British thermal units (mmBtu) from $11.70 last week, industry sources estimated, its lowest levels since Aug. 4.
Asian LNG prices fell by nearly two thirds in 2023 to average at $17.68/mmBtu, as demand in Asia and Europe was subdued for most of the year.
Despite the risk of attacks on commercial vessels in the Red Sea and force majeure notifications Novatek sent over future Arctic LNG 2 supplies following U.S. sanctions, Asian prices have seen little upside.
“There have been fairly mild temperatures in parts of northeast Asia for the time of year and ample LNG stocks for now,” said Ryhana Rasidi, gas and LNG analyst at data and analytics firm Kpler.
“As a result, LNG imports to northeast Asia have been lower this week, but also in part due to the tsunami which hit Japan on Jan. 1 which led to a brief disruption in imports that day.”
Global LNG: Asia spot LNG price remains at 4-month low, falls 58% in 2023
A new year’s day earthquake in the Hokuriku region occurred shortly after Japan’s nuclear power regulator lifted an operational ban on Tokyo Electric’s Kashiwazaki-Kariwa nuclear power plant.
The earthquake has cast doubt over the country’s push to bring more nuclear capacity back online to reduce reliance on imported fossil fuels like LNG.
LNG stocks held by major power utilities in Japan last stood at 2.49 million metric tons as of Dec. 24, according to data from the ministry of economy, trade and industry, down 0.16 million tons from the previous week.
In Europe, gas inventories remain high, with storage facilities at 87% of capacity as of Jan. 1 versus 83% the previous year, according to Rystad Energy.
Gas consumption for heating could rise in the coming week as “temperatures in Northwest Europe are expected to hit -4 degrees Celsius, up to 6 degrees Celsius below normal for this time of year,” it added in a note.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in February on an ex-ship (DES) basis at $9.87/mmBtu on Jan. 4, a $0.80/mmBtu discount to the February gas price at the Dutch TTF hub.
Argus assessed the price at $9.850/mmBtu, while Spark Commodities assessed it at $9.872/mmBtu.
Meanwhile on spot LNG freight rates, Atlantic rates were estimated at $108,500/day on Friday, while Pacific rates were at $80,250/day, said Qasim Afghan, an analyst at Spark Commodities.
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