Asian LNG Prices Remain at Near One-Year Low Amid Supply Disruptions

Asian spot liquefied natural gas (LNG) prices have stayed at a near one-year low this week, with supply disruptions from three export facilities in the region and some buying interest keeping losses in check despite weak overall demand.

The average LNG price for June delivery into north-east Asia was recorded at $11.50 per million British thermal units (mmBtu) according to industry sources. While this is a decrease from $11.80/mmBtu last week, it still represents the lowest levels seen since mid-May.

Senior analyst Masanori Odaka from Rystad noted, “Lower Asian LNG prices this week prompted opportunistic buying by some East Asian importers, while supply disruptions at export projects in Australia and Brunei provided support to otherwise falling regional fundamentals.” He mentioned that Korea Gas Corporation, Taiwan’s CPC Corporation, and a Chinese importer had recently made spot purchases.

Despite the supply disruptions, some Asian importers took advantage of the lower prices to make purchases, while others adopted a wait-and-see approach amidst turbulent market conditions and sufficient storage levels.

Inpex Corp, the operator of Australia’s Ichthys LNG, reported a temporary decrease in production without specifying the reason or when full production would resume. Additionally, both Malaysia’s Bintulu LNG complex and the Brunei LNG plant were experiencing production issues, with Brunei LNG even cancelling a tender for a June delivered cargo.

While the inter-basin arbitrage has remained closed for prompt deliveries, with minimal carrier diversions towards Asia, Asian buyers have not aggressively pursued Atlantic basin cargoes since the production outages, according to Martin Senior from Argus.

European and U.S. Market Trends

In Europe, the North West Europe LNG Marker (NWM) price benchmark for June deliveries was assessed at a discount to the Dutch TTF hub price. Discounts for May delivery were wider due to regasification terminal maintenance in northwest Europe, pushing buyers to seek regasification slots in more expensive terminals.

Meanwhile, the U.S. front month arbitrage to north-east Asia via the Cape of Good Hope is now only marginally pointing to Europe, indicating shifting market dynamics.

Regarding LNG freight rates, Atlantic rates dropped for a fourth consecutive week to $21,750/day, while Pacific rates fell to $23,250/day, as reported by Spark Commodities analyst Qasim Afghan.

In conclusion, the Asian LNG market continues to navigate through supply disruptions and fluctuating demand, with buyers cautiously monitoring market conditions and taking advantage of opportunistic buying opportunities amidst the ongoing challenges.

(Source: Reuters)