LNG Bunker Snapshot: LNG prices weaken amid Iran-US ceasefire

Rotterdam’s LNG bunker price has declined amid a Gulf war ceasefire and improved supply outlook, while Singapore’s price has made a steeper fall as bunker premiums have narrowed.

Weekly changes in LNG bunker prices:

• Rotterdam down by $37/mt to $985/mt
• Singapore down by $76/mt to $1,204/mt

Rotterdam

Rotterdam’s LNG bunker price has declined for a third consecutive week following a 3% drop in the front-month Dutch TTF Natural Gas contract, a key benchmark for European gas prices.

The fall in the TTF price has come “following the announcement of a conditional ceasefire in the Middle East” on 8 April, according to the Japan Organization for Metals and Energy Security (JOGMEC).

“TTF futures dropped… reflecting optimism around a potential temporary reopening of the Strait of Hormuz,” two analysts from ING Bank noted.

“The reopening of the Strait of Hormuz means that the 20–25 % of global LNG which is produced in the Persian Gulf area can again enter global markets. As a result, European gas prices fell sharply,” Mind Energy added.

“A shift from underground gas storage from withdrawal to injection, and decreased demand across Europe due to warmer weather,” also contributed to the downward pressure on the benchmark, JOGMEC said.

“When the weather is high, you can put some gas in your storage site: EU gas storage sites turned to storage sites, with daily filling rates surging,” said Greg Molnár, gas analyst at the International Energy Agency.

EU underground gas storage reached 29% on 10 April, up slightly from 28% a week earlier, but still 17% lower year-on-year, according to data from Gas Infrastructure Europe.

Singapore

Singapore’s LNG bunker price has fallen by $76/mt over the past week to $1,204/mt. That has mainly been due to a 20% drop in assessed bunker delivery premiums, which have declined from $242/mt to $194/mt.

Asian LNG bunker prices typically follow the NYMEX Japan/Korea Marker (JKM), which has decreased by $0.55/MMBtu ($29/mt) over the same period. That has brought the front-month JKM contract down to $19.42/MMBtu ($1,010/mt) and added downward pressure on Singapore's LNG bunker price.

Consequently, Singapore’s LNG bunker price premium over Rotterdam has narrowed sharply in the past week, from $258/mt to $219/mt.

The decline has largely been driven by “the announcement of a conditional ceasefire between the US and Iran” on 8 April, according to JOGMEC.

“Adding to hopes the worst is over, reports emerged that Qatar is preparing to restart production at its Ras Laffan LNG export facility. The operation halted in early March,” said ANZ Bank’s senior commodity strategist Daniel Hynes.

“Qatar is mobilizing its workforce to resume production at the world's biggest LNG plant,” echoed Bloomberg News' Stephen Stapczynski.

The market softened further “with supply and demand not being particularly tight,” JOGMEC added.

“Chinese LNG imports plunged… last year… a rare decline in nearly two decades of almost uninterrupted growth… Even before the US and Israeli strikes on Iran shattered the supply chain from the Persian Gulf, Chinese demand for gas was falling as the economy slowed,” said Bloomberg's Stapczynski.

Japan’s LNG inventories for power generation stood at 2.2 million mt on 8 April, unchanged from the previous week, according to data from Ministry of Economy, Trade and Industry.

Other LNG bunker news

Singapore-based Eastern Pacific Shipping (EPS) has completed its 600th ship-to-ship (STS) LNG bunker operation. The bunker vessel FueLNG Bellina delivered LNG to the dual-fuel vehicle carrier CMA CGM Indianapolis in Singapore.

US-based LNG supplier Sawgrass LNG & Power delivered LNG to a dual-fuel yacht in Port Everglades in the US.

Bunker supplier Avenir LNG has supplied LNG to a TT Line dual-fuel ferry in the Lithuanian port of Klaipėda.

US-based fuel supplier Stabilis Solutions has cancelled its previously announced 10-year LNG offtake agreement linked to its planned Galveston liquefaction plant.

Meanwhile, UK-based marine services firm James Fisher has taken delivery of the Orca Fisher, a new LNG dual-fuel chemical and product tanker.

By Tuhin Roy

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