Global LNG: Asia spot prices extend downward trend ahead of Lunar New Year
Asian spot liquefied natural gas (LNG) prices fell for the fifth week in a row on ample inventories and tepid demand ahead of the Lunar New Year holiday, amid low gas prices in Europe where storage levels are above the five-year average.
The average LNG price for March delivery into northeast Asia was $22 per million British thermal units (mmBtu), down $1, or 4.3%, from the previous week, industry sources estimated.
Prices have fallen more than 21% since the start of 2023.
“Volatility came back early this week with south east Asian players buying a block of cargoes which, while done sub-$20, did push sentiment on supply reduction,” said Toby Copson, global head of trading at Trident LNG.
“Looking at things from a macro perspective, we continue the downtrend as we enter Lunar New Year. I expect a strong response from Asia after the holiday and further strengthening going in to March,” he added.
The lower prices have encouraged some southern Asian countries to return to the market including India’s Gail and Thailand’s PTT.
“There was an assumption in the market that Gail was testing the water after recent fall in prices. That said, it remains unclear whether this tender was awarded after it closed on Jan. 18, as spot prices were a little higher later in the week,” said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
In Europe, gas prices were down amid healthy storage levels and supply.
Kaushal Ramesh, senior LNG analyst at Rystad Energy, said he expects “a slight bullish skew” for the coming week as fluctuating wind power in Europe coincides with colder-than-normal temperatures.
“But given that storage is over 80% full and on track to end the withdrawal season at 16% above the five-year average, upward price momentum will be limited,” he said.
The EU, Britain and Turkey have increased their LNG imports by 49 million tonnes combined in 2022 from 2021, giving them a 32% share of the global LNG market, up from 20% in 2021, according to Alex Froley, LNG analyst at data intelligence firm ICIS.
S&P Global Commodity Insights assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in March on ex-ship (DES) basis at $16.915/mmBtu on Jan. 19, a discount of $2.55/mmBtu to the March gas price at the Dutch gas TTF hub.
The EU Agency for the Cooperation of Energy Regulators (ACER) published its first LNG price assessment on Thursday for Northwest Europe at 56.77 euros per megawatt hour (MWh).
This is equivalent to around $17.95/mmBtu and compares to a TTF price of $19.316/mmBtu, according to an assessment by Argus.
LNG spot freight rates extended losses as vessel availability remains high, according to Henry Bennett, global head of pricing at Spark Commodities.
Spark’s Atlantic rate on Friday fell to a five-month low to $60,750/day while the Pacific rate fell to $84,250/day.