SINGAPORE: Buyers of liquefied natural gas (LNG) from the United States are expected to cancel up to five cargoes for loading in March, half the volumes that were cancelled in February, trade sources said on Thursday.

The exact number of cancellations was not immediately clear but several trade sources estimated a range of zero to five, lower than the 10 cargoes likely cancelled for loading in February.

Limited availability of ships, continued congestion in the Panama Canal and a drop in LNG prices in Asia are likely the reasons for there to be potentially up to five cargo cancellations, the traders said.

"It's a combination of no arbitrage between Europe and Asia, JKM (Japan-Korea-Marker) price drop, still tight shipping and the Panama issue," one of the sources said, declining to be named as he was not authorised to speak with media.

Asian LNG spot prices rose to a record high earlier this month, driven by freezing temperatures across Asia and Europe and as the cost of shipping the fuel globally also surged.

LNG buyers are typically required to provide advance notice of cancellations from US LNG terminals. Last year, many buyers were forced to cancel US cargoes when demand plummeted due to coronavirus induced lockdowns, though February's cancellations were more to do with limited ships available.

But with temperatures expected to get warmer post-winter, spot prices for cargoes delivered into North Asia in March have fallen to less than half the average price of cargoes to be delivered in February.

Congestion delaying LNG shipments via the Panama Canal is also expected to last until March, driving up costs of shipping the cargoes to Asia, traders added.

Still, with prices in Europe and Asia much higher than in the United States, cancellations were expected to be minimal, if any.