Global LNG: Asia spot LNG price rises on hotter summer forecast, supply concerns

LONDON: Asian spot liquefied natural gas (LNG) prices rose this week on forecasts for higher cooling demand this summer and tracking a rally in European gas prices underpinned by supply concerns due to Middle East tensions and weakness in U.S. feedgas demand.

The average LNG price for June delivery into north-east Asia rose to $10.40 per million British thermal units(mmBtu), from $10.20/mmBtu in the previous week, industry sources estimated.

“Uncertainty over the Middle East conflict and varying U.S. feedgas rates remain a key focus of attention for traders, supporting prices at a time of otherwise bearish fundamentals,” said Alex Froley, senior LNG analyst at data intelligence firm ICIS.

Froley said that China’s April 2024 imports were at 6.7 million metric tons, a record for the month, beating April 2021’s 6.5 million tons and follows the record March and February imports into China also seen this year.

In south and southeast Asia, high temperatures have recently buoyed power demand, lifting power sector gas burn and offering support to demand in India and Thailand, with some prompt spot demand emerging in both markets this week, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.

Global LNG: Asia spot LNG prices fall for first time in over two months

China has recorded strong purchasing activity ahead of the start of summer; however, daily highs are forecast to remain below seasonal norms through May and into early June, Good said.

The market is closely watching how quickly U.S. Freeport LNG would come back from maintenance and debottlenecking works, which started in March and are expected to be completed in May.

“If all goes to plan, the plant could come back at a slightly higher capacity than before, but there’s also the possibility of delays that could remove more cargoes from the near term if the work takes longer,” ICIS’s Froley said.

In Europe, gas stocks are 62.6% full, high levels for the time of year, leaving the continent well on track to refill ahead of next winter.

“Market speculators have entered a net long position, that suggests that the markets are expecting further upside pressure to gas prices. The short term outlook is dominated by lower temperatures, which will lead to a slower feed of European gas inventories,” said Hans Van Cleef, chief energy economist at PZ - Energy Research & Strategy.

S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in June on an ex-ship (DES) basis at $9.252/mmBtu on May 2, a $0.25/mmBtu discount to the gas price at the Dutch TTF hub.

Argus assessed the June delivery price at $9.550/mmBtu, while Spark Commodities assessed it at $9.508/mmBtu.

On spot LNG freight, both the Atlantic and Pacific rates were steady this week amid ample vessel availability, with the Atlantic spot rate estimated at $42,500/day on Friday and the Pacific spot rate at $46,250/day, said Spark Commodities analyst Qasim Afghan.