- The global LNG market is experiencing mixed signals. Pacific LNG shipping rates are soaring, while European prices see a modest increase.
- This suggests a potential regional imbalance. European gas storage is filling steadily, and JKM LNG prices for Asia dipped slightly.
- The restart of a key US LNG facility is expected soon, potentially impacting future supplies.
Spot liquefied natural gas shipping rates in the Pacific Ocean continued their upward climb this week, defying the recent downward trend observed in the Atlantic market. Spark25S Pacific rates surged by $10,500 this week, reaching $67,250 per day. This marks the largest single-week increase since October 2023 and the highest Spark25S rate recorded since January.
European Prices Rise Modestly
In contrast to the Pacific surge, European LNG prices displayed a more modest increase. The SparkNWE DES LNG front month price for August delivery rose to $10.297/MMBtu, reflecting a $0.542/MMBtu increase compared to the previous week. This price point remains at a slight discount ($0.155/MMBtu) to the TTF benchmark.
European Gas Storage Levels Up
Despite the price increase, European gas storage facilities continue to fill steadily. Data from Gas Infrastructure Europe (GIE) shows that storage levels reached 81.83% capacity on July 17, exceeding the 80.09% recorded on July 10. However, these levels remain slightly below the 82.01% reported on the same date last year.
JKM Retreats in Asia
The benchmark price for LNG cargoes delivered to Northeast Asia (JKM) experienced a slight decline this week. JKM for August delivery settled at $12.200/MMBtu on Thursday, down from $12.330/MMBtu recorded the previous week.
Freeport LNG Restart Expected Soon
In the United States, LNG exports reached 20 shipments in the week ending July 17, while pipeline deliveries to US terminals witnessed a decrease compared to the prior week. The Freeport LNG facility in Texas, which halted operations due to damage from Hurricane Beryl, is anticipated to restart its first train this week. The company expects to gradually ramp up production to full capacity following repairs.
Market Imbalance?
The contrasting trends in Pacific shipping rates and European prices suggest a potential regional imbalance in the LNG market. The significant rise in Pacific shipping rates could be driven by increased demand for LNG in the region, while ample storage levels in Europe might be tempering price hikes there. The coming weeks will be crucial in observing how these trends evolve and whether they converge towards a more balanced global market.
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Source: LNG Prime
