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Asian spot prices jump on Russian supply concerns, Pelosi’s Taiwan visit

Monday, 08 August 2022 | 00:00

Asian spot liquefied natural gas (LNG) prices continued their rise towards record levels this week on an expected pick-up in demand from China as it eases COVID rules and ongoing concerns over curtailed Russian supply to Europe.

The average LNG price for September delivery into north-east Asia was estimated at $45 per million British thermal units (mmBtu), up $2.5, or 5.9%, from the previous week, industry sources said.

That is close to record levels slightly over $48/mmBtu hit in December 2021, according to Reuters estimates.

“Ongoing uncertainties remain around global LNG supply. Price indicator is likely sideways for the week ahead, but upside risk remains, largely driven by uncertainties around Russian flows,” said Nnenna Amobi, senior LNG analyst at Refinitiv.

“Robust demand is still observed in Europe and price dynamics continue to support flows to the region,” she added.

In Asia, prices shot up earlier this week, with some bids breaking $50/mmBtu as market players worried about U.S-Chinese tensions following U.S. House of Representatives Speaker Nancy Pelosi’s visit to Taiwan, but prices later settled near $45/mmBtu, consultancy Trident LNG said.

China’s LNG imports in the first half of 2022 were down around 20% from 2021, but there are signs of reload activity, such as a cargo being lifted from China to deliver to Thailand, according to Alex Froley, LNG analyst at data intelligence firm ICIS.

“China could be a key swing factor, depending on whether it continues to reload cargoes, or moves back into stronger purchasing,” he added, referring to cargoes sold on to other buyers.

In Europe, S&P Global Commodity Insights assessed LNG prices on a delivered ex-ship (DES) basis into north-west Europe (NWE) at $44.272/mmBtu on Aug. 4, a discount of $15.50/mmBtu to September TTF prices, said Ciaran Roe, global director of LNG.

LNG cargo prices into North Asia are trading above European prices at the moment, due to a rebound in demand in the world’s largest importing region, he said.

“The gap between North Asia and European LNG prices is nearly wide enough to attract U.S.-origin cargoes to Japan and Korea via spot deliveries in October,” Roe added.

European LNG imports from January to July reached a record above 100 billion cubic meters (bcm), or 75 million tonnes, almost reaching the level for the whole of 2021, Amobi said

She added that around 35% of total European imports were received from the United States in July, versus 43% in June, mainly due to the loss of Freeport cargoes.

Freeport LNG said the timeline for resuming initial operations at its LNG facility in Texas remained October 2022.

Peru LNG resumed loading after a month-long outage, with the first cargo loaded onboard the Shell-chartered Barcelona Knusten, according to Olumide Ajayi, senior LNG analyst at Refinitiv.

ICIS’s Froley said that while low Russian pipe flows had sent Dutch and German spot gas prices back to all-time highs around $60/mmbtu, prices in Britain and Spain could be $15-20/mmBtu lower, making some tankers wait off the shores of those countries rather than delivering into them immediately, probably hoping for better offers.
Source: Reuters (Reporting by Marwa Rashad Editing by Mark Potter)

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