Asian LNG demand drives stable prices in global market

Asian spot liquefied natural gas (LNG) prices have held steady this week, driven by expectations of warmer weather in the northern hemisphere. The surge in temperatures during the summer season has led to an uptick in the need for electricity for cooling purposes, supporting the demand for LNG in the region.

The average price for LNG deliveries to northeast Asia in August is estimated at $12.50 per million British thermal units (mmBtu), slightly lower than the previous week's rate of $12.60/mmBtu. This consistent pricing trend is attributed to the ongoing demand for cooling power in countries like Japan and China.

Japanese importers, particularly Kansai Electric, are actively seeking spot cargoes for delivery in late July or early August. Another Japanese utility is also considering a cargo for September delivery, highlighting the continuous need for LNG in the region. The preference for U.S. free-on-board (FOB) LNG cargoes in Asia remains strong, with opportunities for deliveries in August and September.

Meanwhile, Chinese importers are anticipated to have reduced demand compared to the first half of the year due to higher contracted volumes, limiting the necessity for spot purchases. Chevron has resumed full LNG and domestic gas production at its Wheatstone gas facility in Australia after a temporary shutdown for repairs, contributing to the stability of LNG supply in the market.

In Europe, LNG prices have remained relatively stable, with concerns over potential disruptions in Russian gas supplies via Ukraine providing some support. Egypt recently secured 20 LNG cargoes in its largest purchase to meet summer demand from July to September, with major trading houses like TotalEnergies, Vitol, and Trafigura playing a significant role in the transactions.

Both Atlantic and Pacific LNG freight rates have surged to record levels, reflecting the robustness of the global LNG market. The overall outlook for LNG prices remains steady, supported by the ongoing demand for cooling power in Asian markets and strategic purchases by key players in the industry.