Asian spot liquefied natural gas (LNG) prices fell this week as China imposed COVID-19 lockdowns, while European gas prices rose, maintaining their premium to attract cargoes to the region amid risks of Russian gas supply cuts.
The average LNG price for May delivery into north-east Asia was estimated at around $33.00 per metric million British thermal units (mmBtu), down $2.00 from the previous week, industry sources said.
The May Dutch gas price at the TTF hub, the European gas benchmark, is around $34.50/mmBtu, still at a premium to Asian spot LNG to attract cargoes.
The European gas market remains concerned that flows of Russian gas, which accounts for some 40% of its supplies, could stop later this month amid a stand-off over a demand for payment in roubles and worries over possible sanctions.
Europe continues to dominate U.S. LNG exports, which rose nearly 16% last month to a record high, according to preliminary Refinitiv data. Europe last month took about 65% of U.S. exports, with about 12% going to Asia.
“The U.S. continues to emphasize European buyers,” said Reid l’Anson, senior commodity analyst at data provider Kpler.
Analysts said more U.S. LNG exports are needed, with European inventories about a quarter full, below the five-year average of about 34% for this time of year.
With U.S. LNG plants producing LNG at full capacity, most of the additional gas going to Europe would have to come from exports intended for other parts of the world, analysts said.
Two U.S. companies have said they will add production capacity. New Fortress Energy Inc proposes to build an offshore LNG export project, while Sempra Energy has agreed to increase the capacity of its Cameron LNG Phase 2 project.
In Asia, China’s spot LNG import quotes were pegged at $30.44/mmBtu for May arrivals, compared to $35.13/mmBtu a week earlier, according to the Shanghai Petroleum and Natural Gas Exchange.
Chinese authorities on Tuesday extended a lockdown in Shanghai to cover all of the financial centre’s 26 million people.
But Japanese purchases could rise.
Japan has delayed the restart of a 870 megawatt nuclear reactor which was supposed to come back online on May 22, and some other outages have been prolonged, analysts said.
“Japanese utilities also seem to have significantly lower storage inventories at the end of March compared to last year,” said Joachim Moxon, LNG Analyst at data intelligence firm ICIS.
Stocks would have to increase by up to 800,000 tonnes in the next three months to reach the same level as June 2021, he added.
“Japan’s LNG demand is looking higher than previously thought, which will come at the expense of gas availability to other parts of the world. Spot buying activity was seen in the week by JERA, Kyushu Electric, Osaka Gas and Kansai Electric,” he said.
Japan also said on Friday it would ban coal imports from Russia in a broad escalation of sanctions, which could lead to more LNG buying.
Source: Reuters (Reporting by Marcy de Luna in Houston and Nina Chestney in London; additional reporting by Marwa Rashad in London and Aizhu Chen in Singapore; Editing by Jan Harvey)