Asia spot LNG prices remain flat below $10/mmBtu despite geopolitical risks
(Reuters) - Asian spot LNG prices remained below $10 per mmBtu for the second week running, as solid inventories and mild weather continue to outweigh geopolitical risk related to the Red Sea conflict.
The average LNG price for March delivery into north-east Asia remained unchanged from last week's level at $9.50/mmBtu, industry sources estimated.
"The market has been subdued for most of the week. However, we're now seeing volatility with utilities coming in who are short," said Toby Copson, head of energy, APAC, at commodities broker Marex.
Spot LNG demand from price-sensitive Asian buyers has seen an increase, as Asian LNG prices have fallen below the $10/mmBtu mark, said Laura Page, manager of gas and LNG insight at data analytics firm Kpler.
She added that the materializing demand in Asia, coupled with recent downside pressure on the European gas prices at the Dutch TTF hub has seen U.S. netback shift back in favor of Asia. Netback is the effective price earned by a producer of LNG at a particular point.
Attacks in the Red Sea by Iranian-backed Houthi militants have recently pushed Qatar, one of the world's largest LNG exporters, to take a longer route via the Cape of Good Hope, delaying shipments to European clients.
"The Red Sea remains devoid of any LNG shipping. The cessation of Red Sea voyages by Qatar, Europe’s only supplier via the Suez Canal, has a big implication for delivery rates," said Robert Songer, LNG analyst at data intelligence firm ICIS.
"However, the impact on spot charter rates has so far been non-existent, which may suggest that Qatar has not yet had to enter the market to procure further tonnage," Songer added.
In the European gas market, prices slipped slightly, coming largely from expectations for a mild final two months of winter in Europe, which could limit the region's remaining stockdraw ahead of April, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
Dominic Gallagher, head of LNG broking at Tullett Prebon, said the market appears to be "in stasis as benign weather conditions and stable supply suppress any bullish signals."
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in March on an ex-ship (DES) basis at $8.054/mmBtu on Jan. 25, a $0.70/mmBtu discount to the March gas price at the Dutch TTF hub.
Argus assessed the price at $8.150/mmBtu, while Spark Commodities assessed it at $8.199/mmBtu.
U.S. LNG exports dropped for a fourth consecutive week to 1.70 million metric tons last week, partially due to operational challenges resulting from the extreme cold weather, Kpler's data showed.
Argus' Good said that U.S. loadings this month could fall short of the record exports seen in December, after cold weather curbed feedgas deliveries and production was disrupted by trips at Freeport LNG and Corpus Christi.
Spot LNG freight rates fell for the eighth consecutive week, with Atlantic rates estimated at $53,250/day on Friday, and the Pacific rates at $55,000/day, said Qasim Afghan, an analyst at Spark Commodities.
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