Asia spot prices steady amid high stocks, muted demand
Asian spot liquefied natural gas (LNG) prices were little changed this week, amid high inventory levels in east Asia which kept demand from the region muted.
The average LNG price for January delivery into north-east Asia LNG-AS was at $16.70 per million British thermal units (mmBtu), industry sources estimated, versus $16.50/mmBtu last week.
“Demand from end-users in northeast Asia has remained largely weak, with market participants flagging continued high terminal inventories in South Korea and Japan in particular,” said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
Recent cold weather and forecasts for Tokyo in the coming weeks did little to spur significant spot market activity by Japanese buyers, Good added, while Seoul is set for above-average temperatures through to the year-end, suggesting little scope for a substantial power and heating demand rebound.
“Beijing is similarly forecast for cold weather until the end of next week, before temperatures pull back… But strong pipeline gas deliveries and an increase in contracted LNG has weighed on the need for buyers to step into the spot market for additional supply.”
China’s gas storage is likely to be able to withstand potential supply disruptions from Central Asia this winter, said Rystad Energy senior analyst Wei Xiong in a note.
Central Asian countries including Kazakhstan and Uzbekistan have previously cut piped gas flows to China for a few months during winter.
The volume of LNG handled by Japanese companies fell 7% year-on-year to 102.12 million metric tons in fiscal year 2022/23 as local demand sagged, said state-owned Japan Organization for Metals and Energy Security (JOGMEC) on Monday.
Elsewhere, S&P Global Commodity Insights assessed its daily northwest Europe LNG Marker (NWM) price benchmark for January-delivery cargoes on an ex-ship (DES) basis at $14.046/mmBtu on Nov. 16, a $0.95/mmBtu discount to the January gas price at the Dutch TTF hub.
“European gas and LNG markets remained well-supplied with gas storage levels still hovering above 99% even with net withdrawals seen across several countries,” said Shermaine Ang, global LNG markets lead.
Spark Commodities assessed the price at $13.801/mmBtu, while Argus assessed it at $14.2/mmBtu.
“While forecasts for northwest European overnight temperatures through December have been revised slightly lower, much of the region is set to undergo a mild spell in the coming days which is set to weigh heavily on heating demand,” added Argus’ Good.
Meanwhile, spot LNG freight rates fell for the first time in four weeks, said Spark Commodities analyst Qasim Afghan. The Atlantic rates fell to $160,750/day on Friday, while the Pacific rates declined to $151,750/day.
Source: Reuters (Reporting by Emily Chow; Editing by Varun H K)