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Asian spot LNG prices drop to new lows of 1 year on weak demand

The price of Asian spot LNG fell to a record low this week due to weak demand. Trade wars also raised concerns about long-term Asian demand.

Average LNG price for delivery to North-east Asia in June Industry sources estimate that the price of a million British thermal unit (mmBtu) was $11.00, its lowest since mid-May 20,24. It had been $11.80/mmBtu a week ago.

"LNG prices expectations have changed in the past two and a quarter months." The U.S. tariff war will slow down global demand. European gas storage targets have been weakened, and imports to China, the world's largest LNG buyer, have dropped.

Froley stated that China's demand for LNG remains subdued. LNG imports in April 2025 will be down 26% compared to April 2020, and imports from January to April this year will be down 23% compared with the previous year.

Toby Copson said there is very little demand for spot cargoes in the East, and utilities haven't yet stepped in to cover cooling needs.

"Sentiment has a negative tone. I do not see a bottom yet. We might see rates stabilizing if price-sensitive nations begin to offer attractively lower prices. Trade wars can destroy demand, but there are plenty of supplies available," Copson said.

According to Florence Schmit, energy strategist at Rabobank, trade tensions are continuing to impact the outlook for LNG consumption this year, especially in Asia. China exported record quantities of LNG last April.

Martin Senior, Argus’ head of LNG pricing, stated that South Korean buyers were looking for cargoes in order to replenish low storages. Indian buyers have also increased their demand due to the low prices.

In Europe, the north-west European delivered price fell, mainly because new regulations by the German government reduced its own national storage targets for this Winter to 70% from 90%. Senior said that this has led to a reduction in summer demand expectations.

Schmit, a Rabobank analyst, said that the weakening of the Asian economy would ease the supply shortages in Europe during the summer injecting season. He also added that U.S. sanctions against Russia's energy industry and EU plans to phase-out Russian gas are still bullish risks on the gas market.

S&P Global Commodity Insights estimated its daily North West Europe Gas Marker (NWM), a price benchmark, for cargoes to be delivered in June ex-ship on May 1. This represents a $0.75/mmBtu reduction from the gas price in June at the Dutch TTF Hub.

Spark Commodities set the price at $9.969/mmBtu for June delivery, while Argus estimated it at $9.860/mmBtu.

According to Spark Commodities analyst Qasim Afghanistan, the U.S. Arbitrage to North-East Asia via Cape of Good Hope is still closed. However, the arbitrage via Panama remains marginally pointing to Asia.

Afghan said that on Friday, the LNG market saw a second-week increase in the Atlantic to $40,750/day. Meanwhile, the Pacific rates were unchanged at $22,550/day. (Reporting and editing by Nina Chestney; Marwa Rashad)

(source: Reuters)