Asian spot liquefied natural gas (LNG) prices edged higher this week as a heatwave in Japan and North Korea spurred cooling demand, while industrial demand in China remained subdued.
The average LNG price for August delivery into north-east Asia (LNG-AS) was at $12.90 per million British thermal units (mmBtu), up from $12.70/mmBtu last week, industry sources estimated.
The price for September delivery was estimated at $12.70/mmBtu.
“Prices have risen this week, supported by a heatwave in north-east Asia. Seoul recorded its hottest day since 2018 and stocks are being drawn down in both South Korea and Japan to meet stronger cooling demand,” said Martin Senior, head of LNG pricing at Argus.
At least two Atlantic basin carriers have diverted away from Europe to Asia since the start of the month and a further two Qatari carriers have changed course from Europe to Asia as well, Senior said.
Meanwhile, demand in South Asia and China remains muted with average cooling demand for the time of year and subdued industrial demand, given production prices and inflation numbers that have been published this week, said Klaas Dozeman, market analyst at Brainchild Commodity Intelligence.
Dozeman said that import tariffs “and the fluid situation around them could influence industrial demand over the coming weeks”.
In Europe, the gas market is stabilising.
“Gas prices may be finding a floor for summer. Europe needs to keep up sufficient competition to keep pulling in cargoes to refill its storage ahead of winter, even with the slight easing of regional targets to 80% from 90% before,” said Alex Froley, senior LNG analyst at data intelligence firm ICIS.
There is the potential for some minor short-term bullishness if heatwaves continue in East Asia and if Japan and Korea’s competition with Europe to secure fuel for summer power generation spikes, Froley said.
However, fundamentals are becoming a little easier, with the second half of the year set to see an extra 7 million tons per annum (mtpa) coming on stream from the second phase of Plaquemines in the United States, as well as 14 mtpa from LNG Canada, he added.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in August on an ex-ship (DES) basis at $11.572/mmBtu on July 10, a $0.440/mmBtu discount to the August futures price at the TTF hub.
Argus assessed the price for August delivery at $11.670/mmBtu, while Spark Commodities assessed it at $11.639/mmBtu.
The U.S. arbitrage to north-east Asia via the Cape of Good Hope continues to point to Europe, while the arbitrage via Panama continues to point to Asia for the sixth week running, said Spark Commodities analyst Qasim Afghan.
In the LNG freight market, Atlantic rates recorded the largest week-on-week decline since January and were assessed at $31,750/day on Friday, while Pacific rates decreased marginally to $38,750/day, Afghan added.
Source: Reuters