LNG Bunker Snapshot: Prices climb across the board amid renewed US-Iran tensions

Singapore-ARA spread narrows to $133/mt

TTF rises on renewed Middle East tensions

JKM edges higher on summer demand

Weekly changes in LNG bunker prices:

• Rotterdam up by $78/mt to $979/mt
• Singapore up by $26/mt at $1,112/mt
• Baltics up by $78/mt to $1,084/mt

Rotterdam

Rotterdam’s LNG bunker price has surged by $78/mt, tracking gains in the front-month Dutch TTF natural gas contract. Over the past week, the benchmark has risen by $1.63/MMBtu to $16.64/MMBtu ($865/mt).

The rally in TTF price has been driven by “concerns over LNG supply… following attacks on merchant vessels in the Strait of Hormuz and US retaliatory strikes against Iran,” according to the Japan Organization for Metals and Energy Security (JOGMEC).

“The market already climbed… once the first reports of an attack on ships in Hormuz came in, and we are of course rising noticeably… after the US and Iran have exchanged attacks and missile strikes,” said market intelligence firm Mind Energy.

The rally was “further supported by higher temperatures across Europe, which boosted demand, and concerns over a slowdown in storage injections,” JOGMEC added.

“LNG imports into Europe have come under pressure as Asia competes more aggressively for spot cargoes, with flows from the Middle East still heavily disrupted. These lower import volumes have coincided with heatwaves across Europe, which would have boosted gas demand for power generation needs to meet cooling demand,” explained Warren Patterson, commodity strategist at ING Bank.

Meanwhile, EU underground gas storage stood at 51.5% on 10 July, up from 49.7% a week earlier, but remained 17% lower than a year earlier, according to data from Gas Infrastructure Europe.

“EU gas storage remains tight, having only recently passed the 50% level, well below the five-year average of 66% full at this point in the year,” Patterson added.

Singapore

Singapore’s LNG bunker price has surged by $26/mt over the past week to $1,112/mt. As this price increase is lesser than the price surge at Rotterdam, Singapore's price premium has narrowed from $185/mt a week ago to $133/mt.

LNG bunker pricing in Singapore typically tracks the NYMEX Japan/Korea Marker (JKM). The front-month contract rose by $0.50/MMBtu over the week to $16.57/MMBtu ($862/mt), supporting the upward trend in bunker prices.

JKM “rose sharply as concerns over LNG supply intensified following attacks on an LNG carrier near the Strait of Hormuz and escalating military tensions between the US and Iran,” according to JOGMEC.

“North Asia LNG prices also surged higher. This comes as rising temperatures across Asia push gas demands higher. Cooling demand has been stronger than normal as many countries rely on gas-fired power to meet any incremental demand,” said Daniel Hynes, senior commodity strategist at ANZ Bank.

“Asia's LNG imports recovered rather strongly in June and grew by 7% yoy, despite the relatively high LNG import prices. this is primarily supported by the rising cooling needs and hence stronger electricity demand,” added Greg Molnár, gas analyst at the International Energy Agency.

Elsewhere in the LNG bunkering sector, Hawaii-based shipping company Matson has selected LNG as its preferred long-term marine fuel, citing the limited availability and higher cost of low- and zero-emission alternatives, along with insufficient bunkering infrastructure.

Meanwhile, gas supplier Molgas has secured a 10-year operating licence to carry out physical LNG bunker deliveries at the Port of Bilbao.

By Tuhin Roy

Please get in touch with comments or additional info to news@engine.online