LNG price spreads between the Japan Korea Market (JKM) and the Dutch Title Transfer Facility (TTF) for balance of winter 2024/25 contracts have fallen, but some analysts find this drop ‘overdone.’ London-based Energy Aspects forecasts the JKM-TTF spread will rise above US shipping differentials via the Panama Canal – opening the arbitrage for US spot cargoes to head to Asian markets at times of peak demand this winter.
Spreads narrowed to $0.53 per MMBtu in recent weeks, down from around $1.13/MMBtu in mid-September – with little fundamental change. Though freight rates have fallen, key US shipping differentials via the Panama Canal have delinked only by an average $0.18/MMBtu month-on-month.
Energy Aspects hence upholds its bullish view on bal-winter outturn JKM prices, mainly due to their similar views on TTF winter 2024–25 prices amid rising geopolitical tensions in the Middle East and systematic buying at the TTF near-curve.
Supply risk
The likely end of Russian gas transits through Ukraine starting from January 2025 and Europe’s rising gas demand in an average winter may lead to supply constraints in the EU, which in turn propel up fuel prices. “Our base case outturn JKM price forecasts average $14.55/MMBtu, $0.85/MMBtu above the latest CME settlements,” they explain.
LNG buyers worldwide have launched tenders for 22 cargoes so far this month, with eight of these confirmed, against 10 cargoes tendered and confirmed last October. Of the 80 cargoes tendered in September, 53 were confirmed and 40 were bought by Asian companies.
