Asian LNG prices lower as demand slows and supply rises
Asian spot liquefied natural gas (LNG) prices were slightly down this week on high storage inventories, continued weak demand and lack of progress on peace talks for Ukraine.
The average LNG price for October delivery into north-east Asia was at $11.40 per million British thermal units (mmBtu), down from $11.65 /mmBtu last week, industry sources estimated.
"We expect further downside to Asian LNG prices, as storage levels remain elevated, while the supply picture continues to firm," said Go Katayama, LNG and gas analyst at data analytics firm Kpler.
Although Japan's summer heat continues, demand for November heating is lagging. Meanwhile, China is leaning more heavily on domestic gas and pipeline imports, reducing reliance on spot LNG and South Korea is well-stocked, exerting further downside pressure.
"Amid these conditions, spot prices may need to test below the $10/mmBtu threshold to revive meaningful buying interest," Katayama added.
Martin Senior, head of LNG pricing at Argus said that prices were affected by the lack of an immediate progress on peace talks for Ukraine, which may lead to an eventual unsanctioning of just over 15 million tons per annum (mtpa) of LNG export capacity.
In China, some of the national oil companies (NOCs) were re-offering cargoes and higher stocks are limiting injection demand, while and strong hydro generation in Guangdong has weighed on gas generation economics, Senior said.
Cooler summer in South and Southeast Asia, has weighed on spot demand, he added.
In Europe, gas prices steadied on Friday around firmer levels reached in the previous session, as attention turns to upcoming heavy maintenance in Norway and gas storage filling needs before the winter.
"The market is feeling fairly comfortable with European storage filling steadily, Chinese demand remaining low and new projects including US Plaquemines and LNG Canada building up output," said Alex Froley, senior LNG analyst at ICIS.
Froley added that if the early months of winter prove comfortable, the market may start sliding further in the second half of winter and into summer 2026.
Aly Blakeway, manager of Atlantic LNG at SP Global Commodity Insights, said that Europe continues to lure in the brunt of US supply despite the relatively lacklustre demand.
LNG imports into the continent remain healthy with expectations for an uptick in procurement of the super-chilled fuel ahead of the heating season, he added.
SP Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in October on an ex-ship (DES) basis at $10.857/mmBtu on August 21, a $0.525/mmBtu discount to the September futures price at the TTF hub.
Argus assessed the price at $10.87/mmBtu, while Spark Commodities assessed it at $10.809/mmBtu.
The US arbitrage to north-east Asia via the Cape of Good Hope is still incentivising US cargos to deliver to Europe. The arbitrage via Panama is marginally pointing to Europe, said Spark Commodities analyst Max Glen-Doepel.
Global LNG freight rates have marginally increased this week, with the Atlantic rates assessed at $36,500/day and Pacific rates at $35,000/day, he added.
(Reporting by Marwa Rashad; Editing by Leroy Leo)
