Some LNG Cargoes Divert To Asia With Lower EU Demand

Some prompt delivery cargoes have been diverted from the Atlantic Basin to the Pacific Basin according to S$P Global sources.

• The trend could indicate an increase in Asian LNG demand as well as reflecting the high storage levels at European terminals amid the delayed start to the winter heating season.
• Suggestions are that sellers might prefer to release vessels early for next loading rather than wait for terminals in the Atlantic Basin despite high freight rates. However, LNG at sea is still very high suggesting many sellers are waiting for the first cold weather in Europe to increase demand.
• A potential price cap in the Europe might prompt sellers to shift LNG to Asia.
• A gradual increase in LNG regas capacity due to much reduced pipeline flows from Russia make Europe a stronger market than Asia and is keeping Europe at a premium to JKM.
• Front month TTF is still showing a premium to JKM with the JKM-TTF spread at -7.6$/mmbtu. The US Netback to Europe is estimated at 28.44$/mmbtu compared to 20.82$/mmbtu.
  • TTF DEC 22 up 2.2% at 128.69€/MWh
  • JKM Dec 22 up 5.7% at 29.11$/mmbtu
  • JKM-TTF Dec 22 up 2$/mmbtu at -7.64$/mmbtu
  • US Natgas DEC 22 down -2.7% at 6.1$/mmbtu