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Asian spot prices rise to record high

Reuters - Asian spot prices for LNG jumped nearly 50% this week to a record high, based on available data going back to 2009, as logistical issues disrupt supply to the world’s top consuming region.

The average LNG price for February delivery into northeast Asia LNG-AS is estimated to be around $21.45 per MMBtu, according to pricing agency S&P Global Platts, up 47% from the previous week ($14.60).

The price is a record high since Platts started assessing the Japan-Korea-Marker (JKM) in February 2009, which combines deals from some of the world’s biggest consumers and became the reference price for spot deals.

Spot Asian LNG prices led the global energy complex last year, gaining more than 140% on booming demand and outages in key suppliers.

The rally this week - eight months after the JKM fell to an all-time low of $1.82/MMBtu - partially results from strong demand for heating during a colder-than-average winter and a shortage of supply in key producing countries such as Malaysia.

Japanese power generators are reducing run rates on their gas plants as they compete with LNG buyers across northern Asia. Demand is also expected to grow in China.

In addition, there have been logistical constraints in bringing supply from the United States and Europe to the Pacific.

Trafigura, one of the biggest independent traders of LNG, has pushed up prices for delivery in the first half of February. The trading firm bid for cargoes at $21.78, for delivery in China, and at $25.00 and $27.80, for delivery in South Korea, two analysts said.

Freight rates have risen five-fold in two months to $223 per day according to Spark Commodities, a joint venture between research firm Kpler and European energy exchange EEX.

“In just two months, the LNG market went through a complete 180-degree rotation,” Kpler said in a report.

“This situation is unlikely to hold for an extended period,” it added.

Prices for delivery in the second half of February have eased to $18.18/MMBtu in intraday bids. Contracts for the first half of March were above $12.00/MMBtu, up from $7.85/MMBtu on December 23, analysts said.

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