Recent Trends in LNG Freight Rates and Market Dynamics

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Rising Spot LNG Freight Rates

Spot liquefied natural gas (LNG) freight rates have seen a significant rise this week, while European prices have remained steady compared to the previous week. In the Atlantic, freight rates increased by $4,250 to $52,500 per day, and in the Pacific, rates rose by $750 to $45,250 per day, according to Qasim Afghan, Spark’s commercial analyst. This marks the largest week-on-week increase for the Spark30 Atlantic rate this year.

European LNG Prices Stability

In Europe, the SparkNWE DES LNG front month price remained relatively steady, with a slight week-on-week increase of $0.02/MMBtu, reaching $11.026/MMBtu for June delivery. The prices have shown minimal fluctuation, maintaining stability amidst potential disruptions in gas supplies from Russia’s Gazprom to Austria.

Impact of Shipping Route Changes

Despite stable freight rates for most of the year, LNG carriers continue to avoid the Suez Canal due to the situation in the Red Sea and decreased LNG transits through the Panama Canal caused by a drought. This has led shipping firms to opt for longer routes to deliver their cargo to Asia.

Record US LNG Cargoes to Asia

Data from S&P Global Commodity Insights revealed that a record number of 123 US LNG cargoes have traveled to Asia via the Cape of Good Hope this year. In contrast, the Panama Canal saw only 16 US LNG cargoes reach Asia, significantly fewer compared to previous years.

European Gas Supply and Storage

European gas prices experienced a slight increase following Austria’s OMV announcement of potential gas supply disruptions from Russia. However, OMV assured that it could meet its contractual obligations through alternative sources. European gas storage volumes continued to rise, reaching 69.48% full as of May 29.

Northeast Asia LNG Prices

In Northeast Asia, the JKM (Japan Korea Marker) for LNG cargo delivered in July settled at $11.960/MMBtu. Prices rose above $12/MMBtu for the first time since December last year due to increased summer demand and supply uncertainties.

Increased Power Demand in Asia

High power demand has driven LNG imports in Asia. First Gen in the Philippines and PetroVietnam Gas both imported spot LNG cargoes to meet the increased electricity demand during recent heatwaves.

LNG Exports and Terminal Operations

US LNG exports increased to 26 shipments in the week ending May 29, with the Freeport LNG terminal shipping six cargoes. Chevron Australia resumed full production at its Gorgon LNG terminal following a mechanical fault that had halted one of its production trains.

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Source: LNG Prime