Low TTF prices make US LNG head to Asia

Wednesday, 02 October 2019
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Near-curve gas prices at the Dutch Title Transfer Facility (TTF) have fallen as low as $3.86 per million British thermal units (mmBtu) in recent weeks, driving up demand for LNG shipping to higher-priced markets in Asia.

Energy Aspects says the TTF Oct-19 contract has already priced in much of the incremental demand from the power sector switching to gas from coal. Demand for Q4-19 cargo delivery to Europe keeps falling, given there is limited storage capacity left for injections in October.

The Japan Korea Market (JKM) Nov-19 premium to the Dutch TTF has increased further above the additional shipping costs for sending US Gulf Coast cargoes to Northeast Asia compared with sending them to Northwest Europe.

Strong interest from Asian buyers

In the price-sensitive South Asia market, buying interest appears strong for October which supports Q4-19 prices in the region. Indian buyers have so far sought 13 cargoes through tender for October delivery, which would be well above spot demand in October 2018 and the highest for any month so far in 2019.

Northeast Asian spot prices are propped up by tenders from China’s Guangzhou Gas for three LNG cargo deliveries over October-December. Chinese buyers will not offtake US cargoes —tariffs mean no US cargoes have been sent to China since March. But Chinese buying will support demand for other cargoes from the Atlantic basin.

“We expect a jump in Chinese LNG import demand in October to 7.4 million tons, from 6.3 Mt in October 2018, based on growth in recent months,” analyst said, suggesting: “There is headroom in Chinese regasification capacity to support this y/y increase in October, although y/y rises later in the winter will be capped by regas capacity reaching maximum utilization.” 

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