RIO DE JANEIRO: Asian spot prices for liquefied natural gas (LNG) jumped nearly 50% last week to a record high, based on available data going back to 2009, as logistical issues disrupt supply to the world’s top consuming region.
The average LNG price for February delivery into northeast Asia is estimated to be around US$21.45 per million British thermal units (mmBtu), according to pricing agency S&P Global Platts, up 47% from the previous week (US$14.60).
The price is a record high since Platts started assessing the Japan-Korea-Marker (JKM) in February 2009, which combines deals from some of the world’s biggest consumers and became the reference price for spot deals.
An individual cargo was also closed above US$30 per mmBTu, one trader said on Friday.
Spot Asian LNG prices led the global energy complex last year, gaining more than 140%.
The rally last week — eight months after the JKM fell to an all-time low of US$1.82 per mmBtu — partially results from strong demand for heating during a colder-than-average winter and a shortage of supply in key producing countries such as Malaysia.
Japanese power generators are reducing run rates on their gas plants, as they compete with LNG buyers across northern Asia.
In addition, there have been logistical constraints in bringing supply from the United States and Europe to the Pacific.
Trafigura, one of the biggest independent traders of LNG, has pushed up prices for delivery in the first half of February, bidding for cargoes at US$25.00 and US$27.80 for delivery in South Korea, two analysts said.
Freight rates have risen five-fold in two months to US$223,000 per day according to Spark Commodities. Traders mentioned rate requests above US$300,000 a day for a carrier, with no independent confirmation the deal was closed.
“In just two months, the LNG market went through a complete 180-degree rotation,” research firm Kpler said in a report.
“This situation is unlikely to hold for an extended period,” it added.
Prices for delivery in the second half of February have eased to US$18.18 in intraday bids. Contracts for the first half of March were above US$12.00, up from US$7.85 on Dec 23, analysts said.
Source: Reuters