GLOBAL LNG-Asia spot LNG prices edge down but remain elevated due to US-Iran conflict

By Marwa Rashad

LONDON, March 13 - Asia spot liquefied natural gas prices edged down this week. along with other energy prices on Friday, but remain elevated as Asia and Europe remain in competition for cargoes due to shipping disruption and QatarEnergy's halt to LNG production.

The average LNG price for April delivery into north-east Asia was estimated at $19.50 per million British thermal units (mmBtu), down from $22.50/mmBtu in the previous week, which was the highest level since mid-January 2023. The price for May delivery was estimated at $18.90/mmBtu, industry sources said.

"The panic premium has retraced somewhat as we end the week but spot is still elevated and reflective of market sentiment and tail risk," said Toby Copson, managing partner at Davenport Energy.

"Logistical issues persist as Middle East flow is close to zero and with shut-ins and force majeure being declared, netbacks make sense for sellers to maintain Asian deliveries over European," he added.

Some 20% of global LNG supply is now offline with QatarEnergy LNG facilities shut for the twelfth day in a row. It would take "weeks to months" to return to normal deliveries, Qatari Energy Minister Saad al-Kaabi said last week.

"The gap in the supply chain from Qatar leaves just five Qatari shipments still on their way to Asia as of March 12 and eight to Europe," said Alex Froley, senior LNG analyst at ICIS.

“If the outage remains relatively short, then Asia may take the lead in the near-term, diverting cargoes to replace missing contract deliveries from Qatar. But the longer it lasts, the more pressure will come to refill European storage. Traders may be able to push some injections from Q2 to Q3, but the longer they wait, the more urgent refilling will become later in the year, pushing TTF prices higher.”

Demand in Asia has mostly come from countries most impacted by the halt in Qatari supply, with buyers in India, Thailand, Singapore, Taiwan and Bangladesh all seeking prompt shipments. China has kept out of the spot market as the country has ample gas storage for the time of year, with prices also too high for price sensitive buyers to step into the market, said Martin Senior, head of LNG pricing at Argus.

In Europe, benchmark Dutch gas prices hovered around 50 euros per megawatt hour, more than 50% higher than their pre-war level.

S&P Global Energy assessed its daily Northwest Europe LNG Marker (NWM) price benchmark for cargoes delivered in April on an ex-ship (DES) basis at $16.903/mmBtu on March 12, a $0.25/mmBtu discount to the price at the TTF hub.

Argus assessed the price at $16.860/mmBtu, while Spark Commodities assessed it at $16.823/mmBtu.

"With EU gas storage inventories hovering near 29% full, the prospect of tighter LNG availability combined with intensifying competition from Asia has heightened concerns that Europe may need to maintain stronger price signals to secure sufficient cargoes to rebuild inventories," said Aly Blakeway, manager of Atlantic LNG at S&P Global Energy.

In global LNG freight, Atlantic rates were assessed at $167,500/day, and Pacific fell to $156,750/day, said Spark Commodities analyst Qasim Afghan.