KUALA LUMPUR: Asian spot liquefied natural gas (LNG) prices were flat this week amid tepid demand in northeast Asia, though hot weather in Japan weighed on inventories held by major utilities.
The average LNG price for November delivery into north-east Asia was at $13.10 per million British thermal units (mmBtu), industry sources estimated.
“Market sentiment has remained bearish this week, with comfortable inventory levels in China and overall limited prompt spot activities in Northeast Asia,” said Siamak Adibi, director for gas and LNG supply analytics at FGE, though adding that Northeast Asian buyers like Taiwan’s CPC and South Korea’s Kogas had procured some cargoes for November and December delivery.
“In Europe, underground gas storage is also at about 93% full, reducing the immediate need for LNG cargoes in the prompt market… This condition is likely to remain unchanged until we see a decline in temperatures.”
In Japan, the second top LNG importer, inventories held by major utilities eased to 1.64 million tons as of Sept. 22, versus 1.87 million tons on Sept. 15.
Low inventories in Japan could prompt buyers to enter the market a bit earlier to secure cargoes in preparation for the cold months, added FGE’s Adibi.
Global LNG: Asian spot LNG prices down on muted demand
While the LNG market’s supply situation looks comfortable for the time being, there will be stronger competition between Europe and Asia for cargoes if temperatures start to drop below the previous three winters, said Florence Schmit, energy strategist at Rabobank London.
“Asia will remain the premium market also this winter, but we need to look at what higher demand now means for markets next year,” she said.
In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in November on an ex-ship (DES) basis at $12.375/mmBtu on Sept. 26, a $0.215/mmBtu discount to the November gas price at the Dutch TTF hub.
Argus assessed the price for November delivery at $12.40/mmBtu, while Spark Commodities assessed the October price at $12.225/mmBtu.
Europe benchmark gas prices were impacted this week by a colder weather forecast for the end of the month and October, and changes to Norwegian maintenance outages and supply.
“The emergence of a tender from Turkey’s Botas - which was for more cargoes than some had previously anticipated - on top of expected Egyptian winter demand helped to further tighten the Atlantic market this week,” said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
In LNG freight, Atlantic prices fell to $57,750/day on Friday, cancelling out gains seen last week and further delaying the expected winter rally, said Spark Commodities analyst Qasim Afghan.
Pacific rates continued to decline for a seventh week; Afghan added, falling to $64,000/day, the largest week-on-week decrease in Pacific rates since January.