LNG Bunker Prices Surge Amid Global Supply Concerns

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  • Rotterdam weekly LNG bunker prices up by $4/mt to $597/mt
  • Singapore weekly LNG bunker prices up by $44/mt to $676/mt

LNG bunker prices rose in Singapore and Rotterdam amid escalating geopolitical tensions and strong LNG demand from Asian power plants to meet higher seasonal demand during the summer, reads an Engine release.

Rotterdam

LNG bunker price in Rotterdam has inched up by $4/mt in the past week, reflecting slight gains in the front-month NYMEX Dutch TTF Natural Gas benchmark.

This surge can be attributed to several factors impacting the global natural gas market. Concerns over the situation in the Middle East, particularly the potential closure of the Hormuz Strait, have heightened market uncertainty. The Strait of Hormuz is a crucial route for LNG transport, with Qatar alone accounting for approximately 20% of global LNG trade passing through this choke point.

The escalating tensions in the region have amplified fears of disruptions in LNG supply chains. With Europe’s increasing reliance on LNG since the Russia-Ukraine conflict began in 2022, any disturbances in the LNG market have a more significant impact on European gas supply, head of commodities strategy at ING, Warren Patterson commented.

Factors such as reduced feed gas intake at the Freeport LNG export facility have contributed to the upward movement in LNG bunker prices in Europe, a report from JP Morgan stated.

In Rotterdam, LNG throughput climbed by 3.6% to reach 9.1 million mt in the first quarter of this year, compared to the previous year. This growth was primarily fuelled by an uptick in LNG imports and rising demand for LNG as a fuel.

Singapore

On the other side of the globe, Singapore’s LNG bunker prices also saw a significant rise, climbing by $44/mt to $676/mt. This is because the underlying NYMEX Japan/Korea contract rolled from the May contract to the higher-priced June contract last week, which has raised the JKM benchmark.

The price rise was bolstered by increasing supply risks, notably in the Middle East region. Spot LNG demand remained robust, fuelled in part by an ongoing heatwave sweeping across Southeast Asia.

The Asian LNG market has experienced increased volatility, with strong demand reflecting concerns about energy supply strains during extreme summer weather conditions. “We do believe there is a very real fear premium being embedded in the TTF price, pushing the JKM price higher with it,” a JP Morgan report stated.

The decrease in LNG exports from the US, particularly from terminals like Freeport LNG, has added to supply concerns in Asian markets as well. This, combined with geopolitical tensions, weather-related demand spikes, and supply constraints has pushed prices higher in the past week.

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Source: Engine