LNG

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.

As Asian netbacks for delivered LNG cargoes outbid European prices, buyers are struggling to attract sufficient volumes to offset a looming storage shortfall. An additional 40 cargoes per month would be needed over the next five months, according to ICIS calculations, though economists doubt this is achievable.

Tightening LNG balances in Europe, amid maintenance across Norway’s pipeline network and lower imports, have made Kpler analysts “slightly bullish” on benchmark TTF gas prices, while restocking in China and stronger Asian demand underpin global LNG markets.

Five US-loaded LNG cargoes have diverted from European or Egyptian destinations into the Pacific Basin in the four weeks through mid-May: the WilPride, SK Audace, Umm Al Houl, Adamastos and Sea Navigator. Four are signalling 'For Orders' and one (the Adamastos) is bound for Dahej, India, LNG Journal’s data shows.

Fast-growing Asian demand for cross-basin LNG cargoes has widened price spreads between the Japan Korea Marker (JKM) and the Dutch TTF for the July–September period. An uneven recovery in Hormuz carrier transits risks delaying a return to “normal” exports until October.