The price of LNG at the Port of Rotterdam has decreased by $119 per ton over the past week, reaching $1,488. This is a significant drop that has ended six consecutive weeks of rising prices. Meanwhile, LNG premiums are increasing and have risen to about 7%, from $125 to $134 per ton.
Reasons for the Price Drop in Rotterdam
The decrease in LNG prices is primarily due to an approximately 11% drop in the Dutch TTF natural gas contract last week. This contract is recognized as the gas price index in Europe, and its decline has led to lower LNG prices in Rotterdam. According to Daniel Hynes, senior commodity strategist at ANZ Bank, "Natural gas and LNG prices in Europe are influenced by the decline in crude oil prices."
Additionally, competition between Europe and Asia for LNG supply and the situation in the Middle East affecting supply are considered supportive factors for the market. However, according to Mind Energy, LNG prices in Europe have been corrected downward.
Weather Impacts and Industrial Demand
Mild weather in Europe has also recently limited gas demand. According to Greg Melan, gas analyst at the International Energy Agency (IEA), "Preliminary data shows that industrial gas demand has decreased by more than 5% compared to last year since May," which has added downward pressure on prices.
Meanwhile, LNG prices in Singapore have increased by $130 per ton over the past week, reaching $1,667. This price increase has caused Singapore to now surpass Rotterdam by $179 per ton. LNG prices in Singapore are typically linked to the NYMEX Japan/Korea Marker (JKM), which rose by $2.62 per million British thermal units (MMBtu) last week to reach $27.51.
Escalating conflicts in the Middle East have raised concerns about natural gas supply in Asian and European markets. According to Daniel Hynes, LNG prices in North Asia have increased amid expectations of continued supply constraints from Qatar. Strong buying interest in North Asia has also contributed to this, with countries like Thailand, Pakistan, and Bangladesh seeking to sign long-term LNG supply contracts with American exporters.
In other LNG-related news, the Bureau Veritas Marine & Offshore (BV) classification agency has issued a certification for a liquid CO2 carrier developed by the Shanghai Ship Design and Research Institute (SDARI). Additionally, Taiwanese container shipping company Yang Ming has launched a new dual-fuel LNG container ship. The DNV classification agency and the Liberian International Ship and Corporate Registry (LISCR) have also approved the design of a 12,000 cubic meter LNG bunkering vessel developed by HD Hyundai Heavy Industries of South Korea.
Read more: Decrease in LNG Demand in Asia Due to Supply Crisis
