LNG Market Trends: Rising Shipping Rates and Stable Asian Markets

Slight Increase in LNG Shipping Rates

Spot charter rates for the global liquefied natural gas (LNG) carrier fleet saw a minor rise this week, despite a drop in European prices compared to the previous week. Spark30s Atlantic rates reached $89,500 per day, marking a $2,500 increase from the previous week. This rise represents the smallest week-on-week increase in seven weeks, similar to the plateau observed in Atlantic spot rates this time last year.

Analysis of Atlantic and Pacific Rates

Qasim Afghan, Spark’s commercial analyst, noted that the US arbitrage to Northeast Asia via the Cape of Good Hope, which had been marginally open for much of the year, is now firmly closed for the next 11 months. Meanwhile, Spark25S Pacific rates saw a slight increase of $500, reaching $52,250 per day.

Decline in European LNG Prices

In Europe, the SparkNWE DES LNG front month price for August delivery was assessed at $10.411/MMBtu, reflecting a decrease from the previous week and a $0.12/MMBtu discount to the TTF. Gas Infrastructure Europe (GIE) data showed that EU gas storage volumes continued to rise, with storage 78.10% full on July 3, up from 76.20% on June 26.

Stable Asian LNG Prices and Increased Trading Volumes

In Asia, the JKM (Japan Korea Marker) price for LNG cargoes delivered to Northeast Asia for August settled at $12.420/MMBtu, showing slight fluctuations throughout the week. The first half of 2024 saw increased trading activity and stable spot LNG prices in the Asia-Pacific region, with JKM LNG futures and balance-month next-day futures volumes reaching 495,581 lots, a 71.55% increase year-on-year. The Japan-Korea-Taiwan-China region imported approximately 106.36 million metric tons (mt) of LNG cargoes in the first half of this year, an increase of about 7.25 million mt from the previous year.

Summary

The LNG market is experiencing mixed trends with rising shipping rates, declining European prices, and stable yet active Asian markets. The data indicates significant trading activity and a narrow price range for spot LNG prices in Asia, while gas storage levels in Europe continue to climb.