By Marwa Rashad
LONDON, April 28 (Reuters) - Asian spot liquefied
natural gas (LNG) prices remained at their 22-month lows on
Friday, as demand in China, Japan and South Korea was muted,
keeping buyers away from spot market and encouraging continuous
flows to Europe.
The average LNG price for June delivery into northeast Asia was $11.5 per million British thermal units (mmBtu),
down $0.50 or 3.8% from the previous week, industry sources
estimated.
"Rates have continued to erode, driven by weak spot demand
during a typically less active period. South Asia and the Indian
subcontinent are more active, taking advantage of lower numbers
and absent contender countries," said Toby Copson, global head
of trading at Trident LNG.
Forecast of high temperatures across South Asia is expected
to shore up demand.
In China, the maximum temperature forecasts for southern
China over the coming fortnight are broadly in line with
historical norms, suggesting little potential for early summer
cooling demand in the region, said Samuel Good, head of LNG
pricing at commodity pricing agency Argus.
He added that while South Korean and Japanese forecasts are
expected to have slightly above-average temperatures, it is too
early for that to translate to a sizeable shift in cooling power
demand, especially as both markets continue to hold sizeable LNG
stocks and are set to see much more nuclear generation this
summer.
In Europe, Argus assessed its daily northwest Europe (NWE)
LNG price delivered in June on an ex-ship (DES) basis at
$10.55/mmBtu on April 27, a $2.10 discount to the June gas price
at the TTF Dutch gas hub.
The front-month gas prices at the Dutch TTF hub continued to
ease recently despite last week's below average temperatures
that are also set to last for next week.
"These relatively low temperatures will keep gas demand
higher than normal, especially with a negative dark spread and a
positive spark spread," said Hans Van Cleef, chief energy
economist at PZ - Energy Research & Strategy, referring to
gas-fired generation being more economic than coal generation.
Spark Commodities assessed Northwest Europe DES LNG price
for May deliveries fell to a new low since June 2021, at
$10.687/mmBtu, on strong supplies and high inventories.
Alex Froley, LNG analyst at data intelligence firm ICIS,
said the market is generally looking much more comfortable now,
with Europe’s high stock levels removing concerns about whether
storage can be refilled before next winter.
Traders are also keen to know how fast Europe's industrial
demand could rebound, but while summer prices are lower, it
could be difficult for some users to return in strength if they
fear higher prices in the winter ahead, Froley said.
"Forward prices suggest winter months at higher levels than
summer. And while gas prices are down from 2022’s massive
spikes, they remain double the long-term average, and could do
so for some time to come," he added.
On LNG freight, the Atlantic spot rates held steady this
week at $43,000 per day on Friday, said Edward Armitage, an
analyst at Spark Commodities.
Pacific rates continued to soften, falling to $52,500 per
day on Friday.
(Reporting by Marwa Rashad; Editing by Varun H K)
Messaging: marwa.rashad.thomsonreuters.com@reuters.net))
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