LONDON: Asian spot liquefied natural gas (LNG) prices were at their lowest level in nearly six months amid muted demand in China and Japan due to high stocks after a mild winter, but are expected to get support from stronger European demand.
The average LNG price for May delivery into north-east Asia was at $13.00 per million British thermal units (mmBtu), the lowest level since Oct. 11, 2024 and down from $13.60/mmBtu last week, industry sources estimated.
“Asian demand, most notably China, is lacking. So we’re looking at declining rates and the paper bid isn’t there to support spot,” said Toby Copson, chairman at Davenport Energy Partners.
“Were at a price level that will entice south Asia and India so expect more volume to flow there until cooling demand ramps up across north Asia,” he added.
Stronger domestic production, pipeline imports, renewable generation and weak industrial demand have kept Chinese demand muted, leaving only Taiwan and South Korea as the main spot buyers over the past week, said Martin Senior, Argus head of LNG pricing.
LNG deliveries to Asia have dropped by 10% in the first quarter of 2025. Chinese LNG imports dropped to the lowest since 2022, partly due to a 15% tariff on U.S. LNG imposed by Beijing earlier this year. Yet, JKM prices have traded $4.60/mmBtu above Q1 2024 levels, said Florence Schmit, energy strategist at Rabo Bank.
“Despite weaker Asian LNG demand, strong demand from Europe is expected to keep JKM prices elevated. We forecast Europe’s benchmark gas price to trade in the low 40 euros/MWh over the summer, driven by higher LNG demand for storage purposes,” she added.
EU gas storage inventories were last seen 33.6% full, according to data from Gas Infrastructure Europe.
In the European gas market, prices at the Dutch TTF hub continues to be range-bound, struggling to break out of the 40-45 euros/MWh range, as uncertainty over supply availability in the summer plays against slowly declining gas demand as the weather turns milder, Schmit said.
The market showed little reaction to reports that the metering station at the Russian gas metering station in Sudzha, which is at the transit point where Russia pumped gas by pipeline across Ukraine and into Europe until the end of last year, has been largely destroyed.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in May on an ex-ship (DES) basis at $12.395/mmBtu on March 27, a $0.69/mmBtu discount to the May gas price at the Dutch TTF hub.
Argus assessed the price for May delivery at $12.49/mmBtu, while Spark Commodities assessed the April price at $12.359/mmBtu.
The U.S. arbitrage to north-east Asia via the Cape of Good Hope continues to incentivise U.S. cargoes to deliver to Europe, said Spark Commodities analyst Qasim Afghan.
In the LNG freight market, Atlantic rates dropped this week for the first time in two months to $28,250/day on Friday, while Pacific rates rose to $27,500/day, Afghan added.
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