Asian spot liquefied natural gas (LNG) prices rose for the third consecutive week, reaching a year-to-date high as colder temperatures boosted demand across the region.
The average price for January LNG delivery into northeast Asia increased by 3.4% from the previous week to $15.10 per million British thermal units (mmBtu), according to industry estimates.
“Heating demand is expected to surge in Japan, with Tokyo experiencing prolonged cold spells heading into the new calendar year,” noted Samuel Good, head of LNG pricing at Argus. Current LNG inventories held by major Japanese utilities stand at 2.06 million metric tons, down from last year’s 2.16 million metric tons and below the five-year average of 2.13 million metric tons.
Meanwhile, forecasts predict milder weather in Beijing over the coming days, with colder-than-usual temperatures expected in the latter half of December. Seoul, however, is projected to experience mild weather for much of the mid-winter period, potentially dampening heating demand, Good added.
Global Dynamics: LNG Diverted to Asia Amid Stronger Demand
Colder weather in Asia, coupled with ongoing concerns about Russian gas flows to Europe, has prompted some LNG vessels initially destined for Europe to divert to Asian markets.
“The market remains strong following Europe’s recent cold snap, which drew down storage levels, and ongoing uncertainties regarding Russian pipeline gas supplies,” explained Alex Froley, senior LNG analyst at ICIS.
While additional U.S. LNG supply is anticipated with new capacity at the Plaquemines and Corpus Christi plants, the immediate impact on winter supply is expected to be minimal.
European Market Trends and Freight Rates
In Europe, LNG prices for January delivery showed slight discounts compared to regional gas benchmarks. S&P Global Commodity Insights reported the North West Europe LNG Marker (NWM) price for January cargoes at $14.271/mmBtu, $0.215 below the Dutch TTF hub gas price. Similarly, Argus assessed prices at $14.260/mmBtu, while Spark Commodities noted December delivery prices at $14.083/mmBtu.
The widening price spread between the JKM (Asian LNG benchmark) and TTF (Dutch hub benchmark) has tightened U.S. LNG shipment economics for Asia via the Cape of Good Hope, according to Anais Mathilde La Chon of Spark Commodities. Freight rates for Atlantic LNG rose to $17,500 per day, while Pacific rates climbed further to $24,000 per day.
As winter progresses, the combination of colder weather and shifting trade flows highlights the dynamic interplay between regional energy demands and global LNG markets.
