Singapore (By Muhammad Tashfin):Asian LNG spot prices slipped for a ninth consecutive week, leaving them down more than 40% since the start of the year as demand remains weak.
According to industry sources, the average LNG price for delivery into Northeast Asia in April was $16 per million British thermal units (MMBtu), a decline of $1 or 5.9% from the previous week.
Prices have dropped 77% since August’s $70.50 record highs.
According to Toby Copson, global head of trading at Trident LNG, “the spot market seems to have found a temporary floor; weakness is still obvious world-wide, but a recent emergence of awarded tenders have kept pricing robust.”
He also mentioned that this week, contracts were given to the CPC of Taiwan, the CNOOC of China, the RPBCL of Bangladesh, and the Kansai Electric of Japan.
“As we get into shoulder months the demand could be weaker, maintaining prices where they are, if not somewhat dropping. “If we see any activity from China, rates might increase up quickly,” he said, referring to when prompt prices fall below forward prices.
While there has been some buying activity, overall demand is still considered weak, said Lee Rou Urn, Asia head of LNG pricing at Argus Media.
World LNG: Asia spot prices continue to decline due to weak demand and huge inventories
In order to support prices higher, Lee said, “additional other utilities will need to develop for cargoes in northeast Asia.”
In Europe, S&P Global Commodity Insights assessed its daily north-west Europe LNG Marker (NWM) price benchmark for cargoes delivered in April on an ex-ship (DES) basis at $14.452/MMBtu on Feb. 16, a discount of $1.80/MMBtu to the April gas price at the Dutch TTF gas hub, said Ciaran Roe, global director of LNG.
“Despite increased Asian purchasing, the arbitrage from the U.S. remained closed, with netbacks favoring LNG shipments from North America with a destination in Europe.”
On Friday, the European benchmark gas contract also dropped to a new 17-month low as a result of a favorable supply forecast, good storage levels, and temperate weather that constrained demand.
“Fundamentals are also very weak on the Europe side,” Lee of Argus continued, “especially with the Freeport LNG export project having loaded its second cargo earlier this week.”
There is currently no motivation from European consumers to start importing LNG at this time because underground storages are still significantly higher than they were at this time last year.
Freeport LNG, the second largest LNG export facility in the U.S., had this week sought permission from federal regulators to restart commercial operations at its long-idled export plant in Texas that was shut due to a fire.
The amount of gas flowing from U.S. pipelines to Freeport jumped to its highest since the facility was shut after the company restarted one of the plant’s three liquefaction trains, which turns gas into LNG for export.
According to Henry Bennett, global head of pricing at Spark Commodities, LNG spot freight costs in the Atlantic increased on a weekly basis for the first time since November as the market stabilised.
On Friday, Atlantic rates slightly increased from the previous week to $55,000/day, while Pacific rates increased to $69,250/day.