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GLOBAL LNG-Asian spot LNG gains as colder weather drives demand
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GLOBAL LNG-Asian spot LNG gains as colder weather drives demand
Nov 29, 2024 4:21 AM

SINGAPORE, Nov 29 (Reuters) - Asian spot liquefied

natural gas (LNG) prices gained for a third consecutive week to

hit a new high for the year so far as colder weather in the

region drove demand.

The average LNG price for January delivery into northeast

Asia was at $15.10 per million British thermal units

(mmBtu), up 3.4% from the previous week, industry sources

estimated.

"Heating demand is set to be particularly strong in Japan,

with forecasts for daily minimum temperatures in Tokyo

suggesting a prolonged period of colder weather into the start

of the new calendar year," said Samuel Good, head of LNG pricing

at commodity pricing agency Argus.

LNG inventories held by major Japanese electric utilities

were at 2.06 million metric tons as of Nov. 24, down from 2.16

million metric tons during the corresponding period of last year

and the five-year average of 2.13 million metric tons.

While Beijing is forecast for a mild spell over the coming

days, temperatures are set to dip below seasonal norms in the

second half of December, said Good.

"But forecasts for Seoul suggest a sustained patch of mild

weather, which could substantially limit heating demand through

the mid-winter period."

Stronger demand in the region has led some LNG vessels

initially heading for Europe to divert to Asia instead, he

added.

"In general the market remains strong after a recent cold

snap in Europe that drew down storage, as well as ongoing

concerns about remaining Russian pipeline gas flows to Europe,"

said Alex Froley, senior LNG analyst at data intelligence firm

ICIS.

"New supply is on the horizon, with U.S. Plaquemines and

Corpus Christi plants advancing towards new capacity starting

up, but the impact on the immediate winter may be relatively

limited.

In Europe, S&P Global Commodity Insights assessed its daily

North West Europe LNG Marker (NWM) price benchmark for cargoes

delivered in January on an ex-ship (DES) basis at $14.271/mmBtu

on Nov. 28, a $0.215/mmBtu discount to the January gas price at

the Dutch TTF hub.

Argus assessed the price at $14.260/mmBtu, while Spark

Commodities assessed the December delivery price at

$14.083/mmBtu.

A widening of the JKM-TTF spread this week helped to tighten

the U.S. arb via the Cape of Good Hope for December loading,

said Anais Mathilde La Chon, data analyst at Spark Commodities.

"As of today, for the U.S. arbs to Asia versus Europe to

break even, freight rates must fall to $7,750 per day."

Atlantic LNG freight rates rose to $17,500/day on Friday,

while Pacific rates also gained to $24,000/day.

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