Asia is sourcing liquefied natural gas (LNG) to avoid a repeat of last winter’s crisis when colder than usual temperatures sent LNG spot prices in winter 2020/2021 to record highs.
Today, prices are even higher, but many Asian buyers are still in the spot market despite the high price of gas in the global energy crisis. Growing demand for LNG and increasing US gas shipments to Asia, including China, are sending spot LNG freight rates in the Asia-Pacific region to new highs.
This week, LNG spot freight rates in the Pacific jumped above $ 300,000 per day to a new high, as rates in the Pacific and Atlantic basins continued to rise strongly, said Spark Commodities, LNG freight appraiser. noted.
The spot price of LNG carriers to deliver fuel in December in the Pacific region reached a record high of $ 316,750 per day, up 9% from the previous week. This broke the previous record for LNG spot rates set last winter when a cold snap in Asia pushed LNG prices and freight rates to record highs.
Those records were broken in recent weeks when spot LNG prices in Asia jumped well above $ 30 per million British thermal units (MMBtu) last month. Today, LNG freight rates have also surpassed all-time highs last winter and are five times higher than in early September.
At the same time, the Atlantic Basin LNG spot freight rate jumped 5% from the previous week’s valuation to $ 254,250 per day this week, according to data from Spark Commodities.
LNG prices and demand soar started to grow LNG freight rates spot over $ 200,000 a day in October, as traders scrambled to book ships to ship fuel to energy-hungry Asian markets. LNG carrier rates more than doubled in October alone amid strong demand for ships amid the energy crisis, industry sources said Reuters at the time.
Higher demand in Asia and an increase in U.S. exports to the region, including to China, will likely keep the LNG tanker market tight through the winter, analysts and industry executives say.
“There has recently been more demand in Asia for US LNG, but it also means increased demand for ships to bring LNG to the Pacific,” said Joseph Sigelman, CEO of the gas and LNG logistics company. AG&P Group. Bloomberg this week.
âThe situation for ships will remain tense for the remainder of the winter,â added Sigelman.
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Additionally, hoping to avoid a repeat of last year’s congestion in the Panama Canal, Asian buyers are also booking LNG carriers to travel from the United States to Asia via the Cape of Good Hope. , which is a longer trip that further tightens the LNG market ship, traders told Bloomberg.
Near-record US exports of LNG and record shipments to China in recent months have also increased demand for tankers to transport super-refrigerated fuel to Asia.
After a year without US LNG shipments to China between March 2019 and February 2020, due to the trade war, US exports to China began to increase towards the end of last year to reach a record high in August. 2021, the last available EIA data shows.
In September 2021, China was the top destination for U.S. LNG exports, according to the U.S. Department of Energy’s LNG Monthly for November 2021. show. China received 48.6 billion cubic feet of US LNG in September, followed by Brazil, South Korea, Spain and Turkey. These top five destination countries accounted for 61.4% of all U.S. LNG exports in September, according to DOE data.
So far in November, the gas supply volume to U.S. LNG export facilities has been higher than in October and close to the monthly record for April 2021, according to Refinitiv data cited by Reuters. So far in November, gas volumes going to U.S. export plants have averaged 11.1 Bcf / d, up from 10.5 Bcf / d last month and slightly down from the monthly record April of 11.5 Bcf / d.
By Tsvetana Paraskova for OilUSD
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