Global LNG: Asia spot prices slip on tepid demand

SINGAPORE: Asia spot liquefied natural gas prices edged lower this week, weighed by tepid demand in the region and ample supply conditions.

The average LNG price for February delivery into Northeast Asia was estimated at $9.50 per million British thermal units (mmBtu), slightly down from $9.60/mmBtu from the previous week, industry sources said.

“Northeast Asian demand continues to remain weak despite a cold snap in December, with limited restocking demand on a spot basis following weak power sector demand, with coal still favoured for most generation,” said Martin Senior, head of LNG pricing at Argus.

However, he added that there have been some prompt diversions to South Korea following record low temperatures in Seoul last month, with the demand likely backfilling stocks.

In Europe, S&P Global Energy assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in February on an ex-ship (DES) basis at $9.112/mmBtu on January 8, a $0.515/mmBtu discount to the price at the TTF hub, as colder weather increased LNG uptake and Europe leaned on spot cargoes to meet demand amid lower gas storage.

Argus assessed the price at $8.98/mmBtu, while Spark Commodities assessed it at $8.926/mmBtu.

Looking ahead, while temperatures in large parts of Europe are still below the long-term average, the likelihood has increased that they will rise next week, said Hans Van Cleef, head of energy research at EqoLibrium.

“As a result, expected temperature-related gas demand is falling,” he said.

Meanwhile, investment funds trimmed net short positions in TTF futures over the Christmas period as colder weather and low volume trading pushed up prompt prices, while commercial operators exited long positions amid depleting gas storage levels that could require harder refill procurement during injection season, said independent gas analyst Seb Kennedy.

In LNG freight, Atlantic rates fell for a sixth straight week to $48,000/day, while Pacific rates eased to $44,250/day, said Spark Commodities analyst Qasim Afghan.

The U.S. front-month arbitrage to Northeast Asia via the Cape of Good Hope is more strongly pointing to Europe, driven by a fall in the JKM-TTF spread, Afghan added.