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SINGAPORE - Asian spot liquefied natural gas (LNG) remained flat this week at a two-year low, as ample spot supplies and limited buying activity kept prices steady in a range.
The average LNG price for July delivery into north-east Asia was at $9 per million British thermal units (mmBtu), the lowest since May 2021, industry sources estimated.
While the low prices and summer restocking activity have prompted some buying by users in Asia and Europe, Asia spot LNG prices are still hovering at current levels as "fundamentals are stable", said Hengky, senior LNG analyst at Refinitiv.
"(There are) ample prompt supplies, healthy storage levels in Europe. Weak downstream demand in some Asian markets is also limiting spot buying. Coal is still more economical than LNG."
Key LNG importer China, for example, is not expected to increase spot cargo uptake despite an ongoing heatwave boosting power demand, as tepid industrial demand and high coal inventories limit imports.
While Asian prices have been rangebound most of the week, buying activity by tier-two Chinese importers have kept rates from falling, said Toby Copson, global head of trading at Trident LNG, referring to non-state owned Chinese importers.
"South Asia and India is where the demand is right now and Asia is holding the premium over Europe. Weather remains the catalyst with heatwaves pushing cooling demand and utilities seeking coverage."
While there has been several LNG carriers leaving U.S. terminals this week for Asia instead of Europe, some northeast Asian demand that emerged in recent weeks is price-sensitive and may not hold if Europe competes for spot Atlantic supply, said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
"This is particularly the case in China, for which traders are expecting ample coal and hydroelectric stocks ahead of the peak summer power demand period in the third quarter."
In Europe, S&P Global Commodity Insights assessed its daily north-west Europe LNG Marker (NWM) price benchmark for cargoes delivered in July on an ex-ship (DES) basis at $8.090/mmBtu on June 8, a $0.45/mmBtu discount to the July gas price at the Dutch gas TTF hub, according to Allen Reed, managing editor of Atlantic LNG.
"The market has remained near multi-year lows alongside weakness in the Asia market. Both have seen strong supply met by tepid buying demand with one European-based trader joking they are in competition to see which can be the weakest," he said.
Argus assessed the NWE DES price at $8.05/mmBtu on June 8.
Europe's gas prices mostly rose on Friday as Norwegian gas field outages were extended and lower wind output is forecast for the coming week.
Norway's Equinor also postponed the restart of production at its Arctic LNG plant in Hammerfest by one week to June 14.
Meanwhile, spot LNG freight rates gained this week, with Atlantic spot rates rising to $50,500/day on Friday, their highest levels since March, said Edward Armitage, analyst at Spark Commodities.
"This comes amid an open arbitrage to Asia, with netback forward curves pricing in U.S. cargoes more profitable to Asia than northwest Europe for the remainder of the summer," he said, adding that Pacific rates also rose to $50,500/day.
(Reporting by Emily Chow; Editing by Shilpi Majumdar)