Asia LNG prices slides further; Europe prices to remain high

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LONDON/SINGAPORE — Asian spot liquefied natural gas (LNG) prices fell this week as sufficient supply and muted Chinese demand have disconnected the market from Europe, where gas prices rose after leaks were found on the Nord Stream pipelines.

The average LNG price for November delivery into north-east Asia LNG-AS was $38.5 per million British thermal units (mmBtu), down $3.50, or 8.3% pct, from the previous week, industry sources estimated.

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“Asian prices have remained somewhat indifferent to the Nord Stream news, we saw a brief rally on the paper but spot has softened if anything, due in part to a muted China and a comfortable North Asia (supplies),” said Toby Copson, global head of trading and advisory at Trident LNG.

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“Short term, I expect rates to stay relatively unchanged barring no further supply interruptions. The only one Japanese tender out is a sell tender, so that further illustrates North Asia being comfortable. This alone will pull rates down,” he added.

In Europe, prices rose earlier this week after the Nord Stream gas pipeline system on the bed of the Baltic Sea sustained unprecedented damage, with no clarity when the system would be restored.

Neither pipeline is currently supplying gas to Europe, but the incidents have raised concerns over the safety of the EU gas infrastructure.

S&P Global Commodity Insights assessed LNG prices on a delivered ex-ship (DES) basis into northwest Europe (NWE) at $35.496/mmBtu on Sept. 29, a discount of $22.50/mmBtu to November gas price at the Dutch TTF hub.

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“Overall discounts have deepened this week and there is a significant contango structure of $10/mmBtu from the start of October to the end of November for LNG cargo markets,” said Ciaran Roe, global director of LNG.

Contango is where a futures price is higher than the spot price.

Spark Commodities’ assessment of the LNG DES price for northwest Europe for October was at $37.342/mmBtu, a record discount of $22.47/mmBtu to the TTF October price.

Europe continues to attract strong volumes of LNG and the new Dutch Eemshaven port is looking busy with a steady cargo flow, flowing out gas into the Dutch grid at 18 mcm/day rate, said Alex Froley, LNG analyst at data intelligence firm ICIS.

He added that there are quite a large number of laden tankers waiting offshore, particularly around southern Spain, storing their volumes to deliver later or keeping their options open.

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In the U.S., natural gas prices fell this week on the back of concerns that a potential recession would cause a slowdown in demand. Hurricane Ian also poses a threat to domestic gas consumption, according to Emily McClain, vice president of Rystad Energy.

The Atlantic spot LNG freight rates jumped 91% from the previous week, hitting $318,250 per day on Friday, just below the all time high of $322.5 from January 2021, according to Henry Bennett, head of pricing at Spark Commodities.

The Pacific rates also rose 35% to 276,750 per day on Friday. (Reporting by Marwa Rashad in London and Emily Chow in Singapore; Editing by Louise Heavens)