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Asian LNG Supply Hit By Closed Winter Arb: Platts

LNG

The unfavourable arbitrage economics for Atlantic cargoes to move to APAC has restricted inter-basin flows and is hindering Asian buyers’ ability to utilize spot supply in the winter, according to Platts.

  • Platts sources said the cause of the closed arbitrage was a reluctance from suppliers to move Atlantic cargoes due to high freight rates, long Panama Canal waiting times, and rising European capacity.
  • Sources told Platts that the current East-West spread for November is 50 cents/MMBtu. A second trader said that the spread need to be at least $1.50/MMBtu for the arb to open.
  • The closed arbitrages and wide intermonth contango are boosting floating storage in expectation of higher prices. A total of 2.6m mt of LNG was in floating storage globally Sep. 28.

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