HomeNewsAsia spot LNG holds steady as demand weak, inventories high

Asia spot LNG holds steady as demand weak, inventories high

11/24/2023

Asian spot liquefied natural gas (LNG) prices were little changed this week, slipping slightly from the previous week, as demand was weak and inventories remained high in both Northeast Asia and Europe.

The average LNG price for January delivery into Northeast Asia <LNG-AS> was at $16.40 per million British thermal units (mmBtu), estimated industry sources, versus $16.70/mmBtu the previous week.

Prices have eased about 8% or $1.50/mmBtu from a near nine-month top reached in mid-October.

"The market still sees the absence of major Northeast Asian buyers. China's re-selling (of) volumes for December may also indicate a well-balanced Chinese market with limited interest for securing additional spot cargoes," said Siamak Adibi, principal consultant at consultancy FGE.

"Europe's market fundamentals have (also been) bearish, as underground storage has remained at 99% capacity, constraining LNG imports into European terminals."

Toby Copson, head of energy, APAC, at commodities broker Marex said that fundamentally the market is well supplied with little demand emerging.

"This is supported by North Asian players electing to offer out, which may well continue the downward trend we've been seeing as of late," he said.

Meanwhile, Japan has approved a plan by the country's top power generator JERA to hold a surplus of LNG in the winter as a strategic reserve in case of supply disruptions.

In Europe, S&P Global Commodity Insights assessed its daily northwest Europe LNG Marker (NWM) price benchmark for January-delivery cargoes on an ex-ship (DES) basis at $14.288/mmBtu on Nov. 23, a $0.85/mmBtu discount to the January gas price at the Dutch Title Transfer Facility (TTF) hub.

Commodity pricing agency Argus assessed its daily northwest Europe LNG price for cargoes delivered in January on an ex-ship (DES) basis at $14.30/mmBtu on Nov. 23, a $0.86/mmBtu discount to the January gas price at the Dutch TTF hub.

Cold weather in Europe has added some buy side appetite in the market, said Dominic Gallagher, head of LNG broking at Tullett Prebon.

Meanwhile on spot LNG freight rates, Atlantic rates eased for a second straight week to $160,250/day on Friday, said Spark Commodities analyst Qasim Afghan, while Pacific rates increased to $152,000/day.

Freight rates however are 60% lower than this time last year, for both Atlantic and Pacific routes, he said.

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