Liquefied natural gas (LNG) prices in Asia saw a slight decline this week due to sluggish demand, even as concerns deepened over supply disruptions caused by a strike at Chevron’s Australia LNG projects on Friday. Industry sources estimate that the average LNG price for October delivery into northeast Asia slipped from $13 to $12.90 per million British thermal units (mmBtu).
Toby Copson, Global Head of Trading at Trident LNG, commented, “Asian demand still remains tepid, spot pricing and front-month have dropped this week. However, we still have a strong contango going into winter months, partially pricing in supply disruptions which should see North Asian players starting to test the waters as temperatures begin to come off and we go into heating season.”
A contango market structure indicates that front-month prices are lower than later-delivery contracts. Workers at Chevron’s LNG facilities in Australia initiated a strike over wages and working conditions, potentially impacting facilities responsible for over 5% of global supply.
Samuel Good, Head of LNG Pricing at Argus, noted some demand from India due to hot weather supporting power sector gas demand, but expects this demand to be short-lived as buyers are willing to wait in anticipation of potential spot price drops.
In Europe, the Atlantic LNG price remained sensitive to news of potential Australian strikes. S&P Global Commodity Insights assessed the North-West Europe LNG Marker (NWM) price benchmark for October deliveries at $9.827/mmBtu on an ex-ship (DES) basis on September 7, reflecting a $0.50/mmBtu discount compared to the October gas price at the Dutch TTF gas hub.
Hans Van Cleef, Chief Energy Economist at PZ – Energy, emphasized that price volatility could emerge based on future supply expectations and noted that prices are likely to rise after October to attract more LNG inflow in Europe.
Spot LNG freight rates continued to rise, with Atlantic rates reaching $160,000/day and Pacific rates at $167,250/day, driven by increasing demand for vessels ahead of winter and favorable economics for floating storage in Europe in October.
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