Asian spot prices for Liquefied Natural Gas (LNG) rose this week to the highest since September 2018 due to high demand for heating, a supply crunch and increasing freight rates. The average LNG price for January delivery into northeast Asia was estimated at around $11.10 per million British thermal units (mmBtu), up $3.00 from the previous week. Prices for February delivery were estimated at around $10.50 per mmBtu.
Temperatures in Beijing, Tokyo and Seoul are expected to be lower than average over the next two weeks, increasing gas demand for heating. Rise in imports in China, as the economy recovers and the lack of shipping availability is also helping to push prices up. PetroChina and China National Offshore Oil Corp (CNOOC) said that they will invite global bids for LNG in Shanghai.
A recent tender by Pakistan LNG to buy six spot cargoes for January only garnered interest for half of the requirements, showing how tight the supply situation is. Production issues in Australia and Malaysia, two of the top four largest exporters, and delays in the Panama Canal, through which U.S. ships part of its liquefied gas, are adding to tighter supply.
Prices are expected to stabilize in the second half of January with record volumes coming from the U.S, where natural gas prices are below $3, making exports profitable. LNG prices in Asia have increased by more than a five-fold since June, when lower demand due to the coronavirus pandemic drove them below $2.00/mmBtu.
