Asia spot LNG prices fall on continued muted demand

(Reuters) - Asian spot LNG prices slightly fell this week on continued lack of interest for spot supply from Northeast Asia players and forecast of weaker prompt gas demand in Europe.

The average LNG price for January delivery into Northeast Asia <LNG-AS> slightly fell to $15.5 per million British thermal units (mmBtu), from $15.7 last week.

"Asia has been in a continuation of weak sentiment and declining spot rates. Very little demand from North Asia against a weakening European market has kept sentiment bearish," said Toby Copson, head of energy, APAC, at commodities broker Marex.

"However, the cold spell emerging in China and some Japanese speculation and tenders may firm the market (in the) short term," he added.

A potential for a very cold turn of the year in Northeast China, with forecasts for overnight temperatures to be at least several degrees Celsius below historical norms, could weigh on LNG inventories and widen the scope for the additional spot purchases, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.

"There have been some pockets of demand emerge from buyers in northeast and southeast Asia this week, but the region remains well supplied," Good added.

Prices for LNG in Asia rose to their steepest premium over European prices for two years this week as congestion at the Panama Canal drove up the price of shipping U.S. LNG to Asia.

The spread between the Japan Korea Market (JKM), widely used as an Asian LNG benchmark, and the Title Transfer Facility (TTF), the European gas benchmark, was assessed by S&P at $2.79/mmBtu on Dec. 6, its widest since Dec. 31, 2021.

In Europe, temperatures are returning to seasonal norms following a cold snap and the continent continues to see a healthy supply of LNG, no unplanned outages and comfortable gas stock levels, said Ryhana Rasidi, gas and LNG analyst at data and analytics firm Kpler.

European gas stocks are forecast to remain at all-time highs of around 94 billion cubic meters to the end of the year and into January, according to consultancy Energy Aspects.

Argus' Good said temperatures are forecast to fall back to hold slightly below-average in the final fortnight of December with scope for continued cold weather well into January.

S&P Global Commodity Insights assessed its daily northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in January on an ex-ship (DES) basis at $11.822/mmBtu on Dec. 7, a $0.75/mmBtu discount to the January gas price at the Dutch TTF hub. The price hit a two-month low at $11.275/mmBtu on Tuesday.

Argus assessed the price at $11.85/mmBtu, while Spark Commodities assessed it at $11.887/mmBtu.


Spot LNG freight rates continued to fall this week, with both basins currently at their lowest December spot price in three years, said Qasim Afghan, an analyst at Spark Commodities.


The Atlantic rates fell to $142,500/day on Friday, while the Pacific rate rose to 117,000/day, he said.

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