(Montel) The front-month price of LNG, including delivery costs, to northwestern Europe hit a 10-week low due to falling hub prices and increased regasification capacity, data from Spark Commodities showed.
The February price for LNG delivered ex-ship (or DES) was last assessed late on Thursday at USD 19.49/MMbtu, down week on week from USD 21.73/MMbtu and its lowest since 27 October.
“It’s a combination of the sharp falls in European gas prices and the continued build out of import capacity,” said one LNG market source.
The increased capacity, mainly in Germany and the Netherlands, but also Finland, has led to lower discounts offered at European ports.
Discounts for cargoes for February delivery were assessed last at USD 1.67/MMbtu, up from USD 0.60/MMbtu seen a week ago, which was the narrowest against the TTF since December 2021, when it hit USD 0.10/MMbtu.
Lower LNG landing prices are also tracking TTF prices, which have more than halved over the last month.
Profitability favours Asia
The profitability of shipping to Europe, however, has also decreased and now favours Asia throughout most of the year, the data showed.
The profitability, or netback, of shipping a US cargo from Sabine Pass – including cost, insurance and freight – to Europe, was last assessed for March loading at USD 17.82/MMbtu, only 0.61/MMbtu higher than the Asian route, according to the data.
However, the netbacks spread flattens into April, and then flips to favour Asia slightly for the remainder of the year.
Europe has turned to LNG to replace Russian gas amid supply cuts triggered by Moscow’s war on Ukraine and ensuing sanctions.
“It’s a combination of the sharp falls in European gas prices and the continued build out of import capacity,” said one LNG market source.
The increased capacity, mainly in Germany and the Netherlands, but also Finland, has led to lower discounts offered at European ports.
Discounts for cargoes for February delivery were assessed last at USD 1.67/MMbtu, up from USD 0.60/MMbtu seen a week ago, which was the narrowest against the TTF since December 2021, when it hit USD 0.10/MMbtu.
Lower LNG landing prices are also tracking TTF prices, which have more than halved over the last month.
Profitability favours Asia
The profitability of shipping to Europe, however, has also decreased and now favours Asia throughout most of the year, the data showed.
The profitability, or netback, of shipping a US cargo from Sabine Pass – including cost, insurance and freight – to Europe, was last assessed for March loading at USD 17.82/MMbtu, only 0.61/MMbtu higher than the Asian route, according to the data.
However, the netbacks spread flattens into April, and then flips to favour Asia slightly for the remainder of the year.
Europe has turned to LNG to replace Russian gas amid supply cuts triggered by Moscow’s war on Ukraine and ensuing sanctions.
