Asian spot LNG prices surge 15pc to new high

Asian spot LNG prices have risen to a new all-time high above $40/mn Btu following sharp gains in European gas hub prices.

The ANEA price, the Argus assessment for spot LNG deliveries to northeast Asia, was assessed at $42.095/mn Btu for first-half November deliveries today, up by $5.670/mn Btu or 15.6pc from yesterday. Prices have exceeded the previous high of $39.720/mn Btu reached on 13 January for deliveries in the first half of February this year.

A rally to unprecedented highs in the Dutch TTF price has increased competition for gas supplies ahead of the peak winter demand season in Asia and Europe, pushing up offer levels and prices for deliveries to northeast Asia. The winter season typically runs from October to March.

The front-month November TTF price hit a record high of $39.828/mn Btu yesterday, up by $7.734/mn Btu or 24.1pc from the previous day. Yesterday's price was more than double the level a month earlier and up eightfold from this time last year.

The TTF price has been supported by a combination of factors, including lower-than-average inventories in Europe, uncertainties surrounding the start of gas flows through the 55bn m³/yr Nord Stream 2 pipeline into Germany, rising carbon emission allowance and coal prices, and planned and unplanned outages at gas fields in Norway.

Asian spot LNG prices are poised to rise even further as colder weather sets in, market participants said.

"It will only get worse when it starts snowing in Asia and Europe," a trader said. Heating requirements typically peak during the winter months of January and February, when temperatures tend to be the lowest.

Asian spot LNG prices hit their previous all-time high in January this year, as buyers scrambled for cargoes amid an unseasonably cold winter and a spate of global supply outages.

The Japan Meteorological Agency's latest three-month forecast, published on 24 September, shows a 40pc probability of below-normal temperatures across most of the country from December to February, leading to expectations that this winter will generally be a cold one for Japan and its northeast Asian neighbours. Only the Hokkaido and Tohoku regions are forecast to have a 30pc probability of colder-than-usual weather in the same period.

By Joey Chua