SINGAPORE: Asian liquefied natural gas (LNG) spot prices slipped for a ninth consecutive week, leaving them down more than 40% since the start of the year as demand remains weak.
The average LNG price for April delivery into Northeast Asia was $16 per million British thermal units (mmBtu), industry sources estimated, down $1 or 5.9% from the previous week.
Prices are currently down 77% from record peaks of $70.50 hit in August.
“The spot market seems to have found a temporary floor, weakness is still evident market wide, but a recent emergence of awarded tenders have kept rates buoyant,” said Toby Copson, global head of trading at Trident LNG.
He added that tenders had been awarded this week to Taiwan’s CPC, China’s CNOOC, Japan’s Kansai Electric and Bangladesh’s RPBCL.
“As we move into shoulder months the demand could be lower, keeping prices where they are, if not slightly declining. The forward curve is still in contango and if we see some activity from China, rates could pick up quickly,” he said, referring to when prompt prices fall below forward prices.
While there has been some buying activity, overall demand is still considered weak, said Lee Rou Urn, Asia head of LNG pricing at Argus Media.
Global LNG: Asia spot prices fall further on tepid demand, high inventory
“It will require more of other utilities in northeast Asia to emerge for cargoes in order to provide more support for prices,” said Lee.
In Europe, S&P Global Commodity Insights assessed its daily north-west Europe LNG Marker (NWM) price benchmark for cargoes delivered in April on an ex-ship (DES) basis at $14.452/mmBtu on Feb. 16, a discount of $1.80/mmBtu to the April gas price at the Dutch TTF gas hub, said Ciaran Roe, global director of LNG.
“Despite renewed buying from Asia, the arbitrage from the U.S. remained closed, with netbacks favouring Europe-bound LNG deliveries from North America.”
The European benchmark gas contract fell to a fresh 17-month low as well on Friday on the back of a comfortable supply outlook, and as good storage levels and moderate weather limited demand.
“On the Europe side, fundamentals are also rather weak particularly with the Freeport LNG export facility having loaded its second cargo earlier this week,” added Argus’ Lee.
“Underground storages are still much higher now compared to the same period last year, so there is still limited impetus from European buyers to start importing LNG now.”
Freeport LNG, the second largest LNG export facility in the U.S., had this week sought permission from federal regulators to restart commercial operations at its long-idled export plant in Texas that was shut due to a fire.
The amount of gas flowing from U.S. pipelines to Freeport jumped to its highest since the facility was shut after the company restarted one of the plant’s three liquefaction trains, which turns gas into LNG for export.
Meanwhile, LNG spot freight rates in the Atlantic rose on a weekly basis for the first time since November as the market stabilises, said Henry Bennett, global head of pricing at Spark Commodities.
Atlantic rates edged up on the week to $55,000/day on Friday, while Pacific rates also rose to $69,250/day.