Asian spot liquefied natural gas (LNG) eased slightly this week, slipping for the first time in five weeks, as weak demand in the region weighed on prices.
The average LNG price for July delivery into north-east Asia (LNG-AS) was at $12.30 per million British thermal units (mmBtu), down from $12.40/mmBtu last week, industry sources estimated.
“LNG demand in Asia has remained weak. There have been no signs of strong appetite from major consumers like China and India,” said Siamak Adibi, director for gas and LNG supply analytics at FGE.
“Aside from some organic growth in newer markets, demand in Southeast Asia has also been muted.”
Scheduled maintenance work at Sabine Pass in the U.S. and Australian projects in the coming weeks however will constrain supply, Adibi added.
While temperatures are set to rise above seasonal averages in South Korea and Japan in the coming few weeks, buyers from both countries have strong stocks and have yet to seek additional spot market volume, said Martin Senior, Argus head of LNG pricing, adding that Indian demand has been particularly weak due to the monsoon season.
“GAIL is grappling with tank-top issues, prompting two mid-voyage diversions away from India this week. And other Indian buyers are largely out of the market as prices have consolidated above $12.00/mmBtu, which has weighed on price sensitive demand from these buyers.”
LNG stockpiles held by major Japanese electric utilities were at 2.26 million tons as of June 1, above 2.07 million tons the same time last year and the five-year average of 2.18 million tons, industry ministry data showed.
In Europe, S&P Global Commodity Insights assessed its daily North West Europe LNG Marker price benchmark for cargoes delivered in July on an ex-ship basis at $11.774/mmBtu on June 5, a $0.465/mmBtu discount to the July gas price at the Dutch TTF hub.
Argus assessed the price for July delivery at $11.79/mmBtu, while Spark Commodities assessed it at $11.750/mmBtu.
Natural gas inventories in the European Union have started to build, said Hans Van Cleef, chief energy economist at PZ-Energy.
“The level of filling is similar to other years, despite the fact that the forward curve is not providing too much of an incentive as the price difference between summer and winter is still relatively small,” he said.
“But since energy companies need to deliver during the upcoming winter, they have started to buy gas as they normally do.”
Meanwhile, the U.S. arbitrage to northeast Asia via the Cape of Good Hope decreased this week and is still pointing towards Europe, but the arbitrage via Panama is marginally pointing to Asia, said Spark Commodities analyst Max Glen-Doepel.
In LNG freight, Atlantic and Pacific rates slightly eased to $29,000/day and $20,000/day respectively, he added.
Source: Reuters