Asian spot LNG softens on weak demand; Trump policies in focus
Weak demand, above-average temperatures weigh on prices
Eyes on longer-term US stance on LNG pause, geopolitics
Arbitrage signals US cargoes should still head to Europe
By Marwa Rashad
LONDON, Nov 8 (Reuters) -The average LNG price for December delivery into north-east Asia LNG-AS fell to $13.40 per million British thermal units (mmBtu), down from $13.80 mmBtu last week, industry sources estimated.
"Spot demand has been slow to emerge in north-east Asia," said Samuel Good, head of LNG pricing at commodity pricing agency Argus.
Good said temperatures in both Seoul and Shanghai are forecast to remain above-average through late December which could weigh on gas demand.
Chinese LNG imports were the highest ever for October, at around 6.5 million metric tons, which could be more stocking up ahead of winter than a sign of a longer-term bullish trend, said Alex Froley, senior LNG analyst at data intelligence firm ICIS.
The LNG market has generally shrugged off Trump's return to the White House but the market is closely monitoring his stance, particularly towards Joe Biden's pause on approvals to export LNG from new projects, as well as on the Middle East, China and Russia.
"It will take a while to see the full impacts of Trump’s victory in the U.S. elections. In broad terms, the environment for gas and LNG producers will be more favourable than it would have been under a Democrat president," Froley said.
"But there could also be new tariffs imposed on global trade as well as potential major foreign policy shifts that it’s hard to fully judge as yet, beyond expecting volatility to continue," he added.
In Europe, gas inventories have started to decline due to colder weather and a few days of no wind and solar output, triggering some upward price pressure for prices at the Dutch TTF hub, said Hans Van Cleef, chief energy economist at PZ - Energy Research & Strategy.
Summer 2025 TTF contract prices are higher that those of Winter 2025, in what is known as backwardation.
"Europe will likely end this winter with lower stocks compared to the last winter, meaning its LNG demand requirements will rise next year and the region will have to outbid price-sensitive buyers in Asia, which is creating support for summer prices already," said Florence Schmit, energy strategist at Rabobank London
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in December on an ex-ship (DES) basis at $12.82/mmBtu on Nov. 7, a $0.22/mmBtu discount to the December gas price at the Dutch TTF hub.
Argus assessed the price at $12.820/mmBtu, while Spark Commodities assessed it at $12.879/mmBtu.
The U.S. arbitrage, diverting a physical cargo from one market to another, to north-east Asia for December is currently pricing in at $-0.23/mmBtu, meaning prompt month U.S. cargoes are incentivised to head to north-west Europe for a seventh straight week, said Spark Commodities analyst Qasim Afghan.
In LNG freight, Atlantic rates have risen for the first time in seven weeks to $20,500/day on Friday, while Pacific rates continued to decline for a 13th straight week to $38,250/day, he added.
Reporting by Marwa Rashad; Editing by Nina Chestney
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