LNG

Gas prices at Europe’s benchmark TTF trading hub have hit four-year highs, tilting JKM-TTF spreads in favour of LNG deliveries to Asia. The TTF Dec26 contract increased markedly, according to Spark Commodities data, beginning to affect the arbitrage economics for US LNG.

The premium of Asian LNG benchmark JKM over Dutch TTF for December 2026 delivery has increased to $1.025/MMBtu, its highest level since May, pricing agency Spark Commodities said. Despite the widening spread, flexible U.S. cargoes for December delivery remain economics-wise directed towards Europe rather than Asia, according to Spark's intraday fair-value curves and arbitrage breakeven. "The JKM-TTF spread would have to increase a further $0.450 in order to open up the US arb to Asia via the Cape of Good Hope," Spark said in market commentary published this morning.

Intercontinental Exchange (ICE) has launched new options on the Japan-Korea Marker (JKM) liquefied natural gas benchmark, LNG balance-of-month freight futures and UK base electricity options.

The arbitrage for U.S. LNG cargoes is now favouring deliveries to Europe over northeast Asia, according to Spark Commodities, as shipping costs and regional price spreads render Atlantic-to-Pacific deliveries uneconomic for the remainder of 2026.

Stalled US-Iran negotiations are manifesting LNG price premiums this autumn, with the average price for an October cargo delivered to Northeast Asia forecast at $22.50 per MMBtu. The geopolitical premium is firmly engrained in global LNG markets, fuelling a bullish sentiment in Asia where the price of delivered LNG increased by$0.85/MMBtu week-on-week to nearly$22.10/MMBtu.

Atlantic freight rates for spot LNG cargoes have fallen to a seasonal low of $20,000 per day, down $31 over the last fortnight, opening the arbitrage window for US LNG heading to Europe rather than Asia. Several LNG charterers have fixed vessels below round-trip economics due to a lack of fresh enquiry for Atlantic cargoes from Pacific Basin buyers, while shipowners are seen to be reluctant to ballast vessels westward.

Petronas LNG has signed a head of agreement with Hokuriku Electric to negotiate the renewal of an LNG supply deal for up to 0.54 mtpa for a decade starting 2028. The HoA underscores Japan’s reliance on LNG for power generation.

The Japan Korea Marker (JKM) for LNG delivery into northeast Asia for September could exceed $22/MMBtu at the start of this week as shipping disruptions widens and competition for Atlantic Basin cargoes intensifies between Europe and Asia.

The arbitrage for flexible US LNG cargoes heading to Asia is open with spreads between the Japan Korea Marker (JKM) and the Dutch TTF widening, as the tepid recovery of Qatari and UAE LNG exports is unlikely to outpace rebounding Asian demand.

The Hormuz risk premium has washed out of gas prices since the US-Iran understanding, leaving TTF and JKM far below their March crisis peaks. The physical data does not yet justify it. Combined Qatari and Emirati exports across the strait reached barely a tenth of normal in June, and the downside remains live.