US LNG to Asia Dependent on Access to Panama Canal Slots

Congestion at the Panama Canal could benefit LNG supplies into Europe with US cargoes largely bypassing Asia according to Bloomberg.

• The JKM-TTF spread has narrowed slightly this week back to around 2.2$/mmbtu but remains high having last week reached a peak for the month of around 2.75$/mmbtu.
• The price differential is limiting US LNG flows to Asia via longer routes through the Suez Canal or the Cape of Good Hope according to S&P Global. Only six LNG vessel arrived at the canal to voyage southbound from Nov 1-17 compared to 11 in the period in 2022. Full inventories in Asia at several major LNG import terminals in China and South Korea are also limiting demand from the region according to Rystad Energy.
• “The opportunity to sell more profitably to Asia over Europe from the US depends on your access to Panama Canal slots,” said Ciaran Roe at S&P. “If you have these, then your costs may be sufficiently low to send the cargo to Asia more profitably than to Europe for January arrivals, otherwise it’s more profitable for cargoes to go to Europe.”
• A price difference of 2.4$/mmbtu makes it more profitable to ship a US cargo to northeast Asia over northwest Europe but for shipements via Suez or the Cape, the spread needs to be over $3.7/mmbtu, Roe said.
  • TTF DEC 23 down -0.3% at 46.68€/MWh
  • JKM DEC 23 down -1.1% at 17.22$/mmbtu
  • JKM-TTF DEC 23 down -0.2$/mmbtu at 2.19$/mmbtu
  • US Natgas DEC 23 down -2.3% at 2.83$/mmbtu (vs Nov 22 close)