GLOBAL LNG-Asian spot LNG prices decline on muted demand, high inventories

By Marwa Rashad

LONDON, July 18 (Reuters) - Asian spot liquefied natural gas (LNG) prices declined this week due to weaker demand and strong inventories and as buyers in south Asia found current prices too high.

The average LNG price for September delivery into north-east Asia LNG-AS was at $12.30 per million British thermal units (mmBtu), down from $12.90/mmBtu last week, industry sources estimated.

"Prices have been in a slow downtrend this week due to ample supply and higher inventories. However, we expect Asian utilities to start stepping in to procure for cooling demand as temperatures rise in Asia," said Toby Copson, chairman at Davenport Energy Partners.

"Demand remains relatively weak on a macro scale with U.S.and European hubs reflecting that," he added.

Cooling demand from a heatwave in Japan and South Korea has mostly been met by coal, said Martin Senior, head of LNG pricing at Argus.

Some production outages have cropped up, including at Australia's Gorgon’s third LNG train, the U.S.’ Elba Island terminal and United Arab Emirates’ Das Island undergoing maintenance, he said.

"However, the outages have not pushed Asia to compete for Atlantic basin (cargoes) and current prices were too high for many price sensitive buyers in south Asia and China to compete for spot supply," Senior added.

In Europe, gas prices rose slightly during the week on Norwegian unplanned maintenance but dipped on Friday as supply from Norway rose.

The European Union on Friday agreed an 18th package of sanctions against Russia over its war in Ukraine, including measures aimed at dealing further blows to the Russian oil and energy industry.

The package also includes banning transactions related to Russia's Nord Stream gas pipelines under the Baltic Sea, and with Russia's financial sector.

"While the new EU sanctions package puts a definite halt to the re—utilisation of Nord Stream, it does not change the supply outlook for European gas markets. The 2027 Russian gas phase-out still sticks, which is why the TTF market reaction was rather muted," said Florence Schmit, energy strategist at Rabobank.

U.S. President Donald Trump's threat to impose a 100% tariff on countries buying Russian energy in 50 days failed to rattle the market, she said.

"The tariff rate, alongside the 50-day pause, signalled that this might be more noise than reality...Russia sanctions remain an upside risk although a limited one for now," Schmit added.

S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in September on an ex-ship (DES) basis at $11.397/mmBtu on July 17, a $0.450/mmBtu discount to the September futures price at the TTF hub.

Argus assessed the price at $11.435/mmBtu, while Spark Commodities assessed the August price at $11.269/mmBtu.

The U.S. arbitrage to north-east Asia via the Cape of Good Hope continues to point to Europe. The arbitrage via Panama is also pointing to Europe instead of Asia, said Spark Commodities analyst Qasim Afghan.

In the LNG freight market, Atlantic rates rose to $33,750/day on Friday, while Pacific rates remained relatively steady at $38,250/day, Afghan added.