Asia prices stable on solid storage, new Europe terminal

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Asian spot liquefied natural gas (LNG) prices were unchanged on the week, with Japan and South Korea well supplied and a new floating terminal in Europe beginning operations.

The average LNG price for November delivery into north-east Asia LNG-AS was $46 per million British thermal units (mmBtu), unchanged from the week before, industry sources estimated.

“The market is somewhat disconnected at the moment,” said Toby Copson, global head of trading and advisory at Trident LNG, adding that Japan and Korea are well supplied, at least for September and October.

China’s ample inventory and COVID-19 lockdown have cut its gas needs, with LNG demand so far down around 20% year-on-year.

In Europe, the new Dutch EemsEnergyTerminal, with a capacity of 8 billion cubic meters (bcm) per year, got its first cargo on Sept. 8 and started flowing gas into the onshore gas network a week later, Alex Froley, LNG analyst at ICIS, said.

“We see at least two more ships waiting outside the port ready to deliver in coming days. We expect the new terminal to run at full capacity over the coming months, providing a new access route to the high-priced German market,” he added.

LNG prices on a delivered ex-ship (DES) basis into north-west Europe (NWE) were assessed at $44.788/mmBtu on Sept. 15, a discount of $17.375/mmBtu to October Dutch gas prices, Ciaran Roe, global director of LNG at S&P Global Commodity Insights, said.

The discount deepened despite the new Dutch floating unit in Eemshaven starting to send regasified LNG into the national grid on Sept. 14, Roe added.

“There is a consensus view among LNG and gas market analysts that once more regasification capacity is installed in NWE the discount from LNG to European gas prices will lessen,” he added.

Gas has become the most important commodity in Europe, Rystad Energy said in a report, adding that the continent’s largest economy, Germany, has this year spent 30.84 billion euros on gas due to soaring prices, compared with 35.39 billion (or 1% of GDP) spent in 2021 on imported pipeline gas.

The market is closely watching for any news on whether the 15 million tonnes per annum (mtpa) U.S. Freeport plant will restart on time in November after a fire in June, and any signals of early winter cold spells or news about hurricanes that could impact the U.S. Gulf production, ICIS’s Froley said.

Spot LNG freight rates in the Atlantic were up by $37,500 to $136,750 a day, in a sign of a tightening market, according to Spark Commodities. The Pacific spot freight rates also rose to 138,250 per day.

Henry Bennett, Spark’s head of pricing, said that additional positioning fees are starting to be included in fixtures and negotiations, moving the round trip freight rates higher.

Source: Reuters

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