SINGAPORE: Asian spot liquefied natural gas (LNG) prices held steady for a second consecutive week, as some summer demand kept prices from sliding in an overall tepid market.
The average LNG price for August delivery into north-east Asia was at $12 per million British thermal units (mmBtu), industry sources estimated. It earlier fell to $9/mmBtu on slow demand and high inventories, before rising to a three-month high in mid-June, tracking gains in Europe gas prices.
“Asian LNG prices are holding steady as summer cooling demand is still supporting the regional benchmark,” said Ryhana Rasidi, LNG analyst at data firm Kpler, adding that some restocking activity is expected in the coming weeks in countries like Japan.
“Lately, Japanese LNG stocks held by power utilities have fallen below year-ago levels for the time of year - moving it closer to the five-year average but nonetheless still above it.”
While spot buying is still there for some utilities in North Asia that have been soaking up marginal demand with the heatwave, sentiment overall is weak near-term, said Toby Copson, global head of trading at Trident LNG.
“The market is active, just not on a spot basis, the focus as of late has been around new long-term contract bookings,” he said.
China’s Zhejiang Energy inked a 20-year deal with Mexico Pacific Ltd to receive one million tons of LNG annually from 2027, while PetroVietnam Gas said it is in separate talks with U.S. energy giant ExxonMobil and Russia’s Novatek on LNG cooperation.
Global LNG: Asia spot LNG prices flat as demand remains tepid
PetroVietnam Gas is also expected to receive the country’s first LNG cargo on Monday from Indonesia’s Bontang plant, while Philippine power producer First Gen Corp awarded its tender for its first LNG cargo to Shell Eastern Trading for delivery between August and September.
“Southeast Asia is a growth market for LNG this year. Two projects are starting up in the Philippines, Vietnam is taking its first cargo and Thailand has greatly increased its imports,” said ICIS LNG analyst Alex Froley.
“However, these aren’t huge markets yet, and the newer importers could struggle to compete if spot gas prices were to soar higher in a cold winter.”
In Europe, S&P Global Commodity Insights assessed its daily north-west Europe LNG Marker (NWM) price benchmark for cargoes delivered in August on an ex-ship (DES) basis at $9.889/mmBtu on July 6, a $0.40/mmBtu discount to the August gas price at the Dutch gas TTF hub, with prices slipping as the region trended toward capacity storage requirements.
“EU gas storage levels on July 5 was at 78.63%, compared to 60.16% full at this time during the previous year,” said Shermaine Ang, global LNG markets lead.
“Commodity Insights also expects storage to reach the 90% target by mid-August on the back of muted demand and stronger LNG supply,” she said.
Meanwhile, commodity pricing agency Argus assessed the NEW DES price at $9.95/mmBtu on July 6.
“We’ve seen a substantial widening of the spread between front-month northeast Asian and northwest European delivered prices,” said Samuel Good, Argus head of LNG pricing.
“The wider spread means that the inter-basin arbitrage has reopened, at least for loading over the next couple of months, as the incentive to market Atlantic cargoes to Asian buyers over European LNG markets returns.”
He added that weak demand has weighed on the number of European buyers competing for prompt cargoes.
On LNG freight, spot rates in the Atlantic held around $73,000/day throughout the week, while Pacific rates were steady around $71,250/day, said Edward Armitage, an analyst at Spark Commodities.
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