Surging LNG Bunker Prices in Singapore And Rotterdam React

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Singapore’s LNG bunker prices rose due to JKM’s switch to a higher-priced contract and geopolitical tensions, reports Engine.

Changes in weekly LNG bunker prices:

  • Rotterdam up by $7/mt to $619/mt
  • Singapore up by $35/mt to $710/mt

Rotterdam

The LNG bunker price in Rotterdam has increased by $7/mt over the past week, mirroring slight gains in the front-month NYMEX Dutch TTF Natural Gas benchmark.

Despite the EU’s gas storage levels being full at 67%, which is higher than last year, the TTF benchmark has increased. Analysts predict that Europe will head into the next winter with full storage, potentially leading to lower prices, head of commodities strategy at ING Warren Patterson said.

Fluctuations have been rather small on the European gas market at the moment, compared to the quite sharp price jumps and falls seen earlier during spring, Energi Denmark said in a note.

In the EU, some gas production sites have resumed operations after maintenance activities ended last week, but others, like Kaarsto and Visund, are still undergoing yearly maintenance. Gas production from the Sleipner gas field was also unavailable on 18-19 May.

Russia plans to significantly boost its LNG production from 33 million mt/year in 2023 to 110 million mt/year by 2030, as reported by Russian news agency TASS. It remains unclear how the country plans to ramp up production amid sanctions imposed by the West.

The European Commission is considering new measures that could include restrictions on three Russian LNG projects and Russian LNG re-exports from EU ports. However, the enforcement of these sanctions encounters challenges, primarily due to resistance from EU member countries like Hungary, which heavily rely on Russian gas imports.

Singapore

In Singapore, LNG bunker prices surged by $35/mt to $710/mt. This steeper increase is partly linked to the underlying NYMEX Japan/Korea Marker contract (JKM), which has rolled from the June to the higher-priced July contract, elevating the JKM benchmark and bunker prices.

Asia-Pacific LNG spot prices have also increased, driven by geopolitical tensions, particularly after clashes between Iran and Israel.

The strong demand for LNG cargoes persists in Singapore, as it remains more cost-effective to ship LNG from the US to Asia than to Europe, factoring in distance, insurance, and additional costs, according to Spark Commodities data.

Indian utilities are expected to seek extra spot LNG volumes for delivery in June and July due to an ongoing heatwave and higher power demand in the country, Rystad Energy reported. As of the end of April 2024, India imported a total of 8.47 million mt of LNG between January and April, much higher than 6.55 million mt imported in the same period last year.

Singapore’s LNG bunkering sales reached a new record in the first four months of this year, with sales totaling 111,000 mt from January to April, according to data from the Maritime and Port Authority of Singapore.

This is significantly higher than the 12,000 mt sold in the same period last year.

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Source: Engine