SINGAPORE: Asian spot liquefied natural gas (LNG) prices edged up this week to a six-week high amid supply concerns and following some spot demand pickup from buyers.
The average LNG price for May delivery into north-east Asia rose 8% from the previous week to $9.40 per million British thermal units (mmBtu), its highest level since February 9, industry sources estimated.
“European TTF and Asian LNG front-month contracts have reached a six-week high due to unplanned outages and increasing demand from Asian buyers,” said Ana Subasic, natural gas and LNG analyst at data and analytics firm Kpler, referring to Europe gas prices at the Dutch TTF hub and Freeport LNG’s announcement to shut two of its three trains, or liquefaction units.
Subasic added the contracts are expected to hold steady as rising demand in Asia remains a focus point.
Asian spot prices had eased to a near three-year low of $8.30/mmBtu last month, as ample inventory levels amid mild winter weather weighed on prices.
Cheaper spot LNG boosted demand from Asian buyers, lending some support to prices.
Global LNG: Asian spot LNG prices inch up on emerging Chinese demand
This has led some buy tenders going unawarded this week after offers were deemed too high, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
Additionally, a ramp-up in Thailand’s gas production could further curb spot demand, as the Erawan block looks to almost double output, seen late last year, he added, though the market is eyeing the potential for an early summer hot spell in the country.
In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in May on an ex-ship (DES) basis at $8.15/mmBtu on March 21, a $0.30/mmBtu discount to the May gas price at the Dutch TTF hub.
Argus assessed the April delivery price at $8.150/mmBtu, while Spark Commodities assessed it at $8.054/mmBtu.
Analysts said maintenance work at Freeport LNG and expectations of colder weather ahead boosted prices in Europe.
“Europe is bracing for a cold snap, forecasted to begin this weekend and extend into early next week, which is expected to sustain net withdrawals from storage sites on an aggregated basis,” said Kpler’s Subasic.
U.S. LNG company Freeport LNG said on Wednesday its Train 2 liquefaction unit has been shut down, while Train 1 will be taken down imminently.
It expects inspections and subsequent repairs at both units to be completed by May.
Meanwhile on spot LNG freight, Atlantic rates rose to $53,500/day on Friday, said Spark Commodities analyst Qasim Afghan. Pacific rates, however, fell for a fourth consecutive week, easing to $49,250/day.
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