The Japan-Korea Marker/Northwest Europe spread fell to 16.3 cents per MMBtu on 1st October, the lowest level since 12th October, 2023.
His was due to weak Asian LNG demand and worries over potential tight constraints in Europe during the winter, S&P Global Platts reported.
While the narrowed spread was partly due to European LNG prices strengthening on 1st October, driven by escalating Middle East tensions, a negative East/West arbitrage window highlighted thin appetite for LNG volumes in Asia.
Platts assessed the East/West arbitrage (via the Cape of Good Hope) to minus 67 cents, a drop of 3.4 cents on the week, S&P Global Commodity Insights data showed, indicating limited opportunities for traders to shift Atlantic supply to the East.
LNG demand from major importer China remained thin as the flat price was still above $13 per MMBtu, sources said, adding that bidding prices were in the region of $12-$12.50 per MMBtu.
Market participants also noted a minor decline in Chinese domestic gas and trucked LNG prices, which was described as unusual, as prices typically rise before the Golden Week holiday, due to replenishment activity.
Another trader said Chinese demand would also depend on buyers' needs to build inventories regardless of market levels.
Similarly, Indian demand is not expected to increase significantly, as offers remain above $12.5 per MMBtu on a flat price basis, sources said.
Platts assessed the West India Marker, the price for LNG cargoes delivered to West India, Kuwait and Dubai, at $12.213 per MMBtu, or a 40.3 cents per MMBtu discount to NWE, Commodity Insights data showed.
"The market for India was nearly TTF plus 70 cents per MMBtu not so long ago but started falling toward TTF plus 30-40 cents per MMBtu [shortly after]. So, [the Indian market] being a discount [to TTF now] is a big development," a Singapore-based trader said. "I anticipate this will compress spread for JKM/WIM."
Platts assessed the Southeast Asia Marker at a 31.6 cents per MMBtu discount to JKM. The spread was potentially widening amid thin regional demand, market sources said.
"LNG demand in Southeast Asia typically peaks from March to May and dampens at year-end, unlike Northeast Asia, where demand surges during the winter months," a regional buyer said.
Healthy inventory levels across the region and high spot prices resulted in several cancelled tenders in September. PTT and PetroVietnam Gas both cancelled tenders for October cargoes.
Meanwhile, European gas prices remained resilient, due to supply-related risks stemming from the Middle East conflict and the early stoppage of gas flows from Russia via Ukraine, sources said.
Europe is also experiencing heavy maintenances at the Norwegian Continental Shelf, which, although planned, were adding to bullish sentiment, due to the potential for unplanned extensions.
Northwest European countries - Belgium, Northern France, Germany, Netherlands and the UK - have together imported 2.96 mill tonnes of LNG in September, the highest monthly levels seen in the third quarter of 2024, according to Commodity Insights data.
NWE LNG prices stood at $12.516 per MMBtu, around 53.4 cents per MMBtu higher than prices seen at the same time last year.
