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Global LNG: Asia spot prices ease slightly as demand remains tepid

Asian spot liquefied natural gas (LNG) prices fell slightly this week, as demand in the region remained weak.

The average LNG price for September delivery into northeast Asia LNG-AS was $10.90 per million British thermal units (mmBtu), industry sources estimated, edging down from $11/mmBtu the previous week.

“Asian demand is currently tepid at best, fundamentally most of the bigger players are well covered, perhaps we might see one or two utilities who run short with the ongoing heatwave that could lead to short term tightening,” said Toby Copson, global head of trading at Trident LNG.

“For now we’re range bound in the $10s for September offerings but are starting to see decent premiums October onwards,” he added, as LNG buyers typically start to prepare for winter from October.

Parts of North Asia have been grappling with heatwaves in recent weeks, with South Korea raising the hot weather warning to its highest level for the first time in four years as parts of the country see temperatures of over 38 degrees Celsius.

In Europe, S&P Global Commodity Insights assessed its daily northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in September on an ex-ship (DES) basis at $9.816/mmBtu on Aug. 3, a $0.15/mmBtu discount to the September gas price at the Dutch TTF hub, said Allen Reed, managing editor of Atlantic LNG, adding the Atlantic market had been lifted by supply disruptions.

“Supply side pressure has come from an unplanned reduction from Norway’s Troll gas field and another production issue at the UK’s Bacton SEAL gas terminal.”

Argus assessed the northwest Europe DES price at $9.85/mmBtu, while Spark Commodities estimated the price at $9.749/mmBtu.

“The focus remains on early winter demand, particularly as sellers look to floating storage and slow sailing to take advantage of the contango in DES prices, while buyers and importers in Europe look to late month deliveries that can be held in tank and then regasified and sold at downstream hubs later in winter,” said Samuel Good, head of LNG pricing at commodity pricing agency Argus.

Contango is a situation where the futures price of a commodity is higher than the spot price.

Meanwhile, spot LNG freight rates rose this week, with Atlantic rates estimated $4,250 higher at $75,500/day on Friday, and Pacific rates $3,000 higher at $73,500/day, said Henry Bennett, head of pricing at Spark Commodities.

“(Spark’s) Atlantic forward curve is in steep contango, suggesting a significant tightening over the coming months as we approach winter, with the September forward rate at $151,000/day and October at $202,250/day,” he said.
Source: Reuters (Reporting by Emily Chow; editing by David Evans)

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