LNG Bunker Snapshot: Rotterdam price climbs as Middle East tensions tighten gas market

Singapore-ARA spread narrows to $97/mt

TTF gains on renewed US-Iran tensions

Singapore LNG price steady

Weekly changes in LNG bunker prices:

• Rotterdam up by $67/mt to $1,346/mt
• Singapore up by $1/mt to $1,443/mt
• Baltics up by $64/mt to $1,449/mt

Rotterdam

Rotterdam’s LNG bunker price has surged by $67/mt, tracking gains in the front-month Dutch TTF natural gas contract. Over the past week, TTF has risen by around 1% to $23.63/MMBtu ($1,229/mt).

The rally in TTF prices has come “as geopolitical risk intensified amid continued tensions between the US and Iran,” according to the Japan Organization for Metals and Energy Security (JOGMEC).

“The US and Iran might – or might not – start negotiating again at some point, but for now, nothing suggests a reopening of Hormuz is right around the corner,” Mind Energy commented.

“European gas prices also jumped… as hopes of a resumption in US/Iran talks faded,” two analysts from ING Bank reiterated.

“Competition with Asian buyers for LNG cargoes intensified and uncertainty surrounding developments in the Middle East persisted. Additional support came from unplanned maintenance at Norway's Asgard gas field,” JOGMEC added.

“Tightening supply fundamentals have coincided with stronger European gas demand, up… amid higher gas use in the power sector,” which have contributed to upward pressure on TTF, commented International Energy Agency gas analyst Greg Molnár.

EU underground gas storage stood at 64.4% on 28 August, up from 62.3% a week earlier, but remained 16.7% below the year-earlier level, according to data from Gas Infrastructure Europe.

European gas storage remains tight, and the region will struggle to reach the lower storage target of 75% ahead of the heating season, ING Bank analysts noted.

Singapore

Singapore’s LNG bunker price has remained broadly steady over the past week.

The front-month NYMEX Japan/Korea Marker (JKM) contract has risen by $1.24/MMBtu over the past week. However, this increase was offset by an approximately 4% decline in the assessed bunker delivery premium, which now stands at $4.58/MMBtu ($238/mt).

Singapore’s LNG bunker price premium over Rotterdam has narrowed significantly, falling from $163/mt to $97/mt over the past week. Singapore’s price remained broadly stable, while Rotterdam’s increased.

“A growing sense of tight supply and demand… as well as intensified competition for LNG procurement as European buyers built up inventories in anticipation of winter demand and increased buying driven by concerns over the situation in the Middle East,” have supported JKM, according to JOGMEC.

“The lack of progress towards a Middle East peace deal also pushed natural gas prices higher in… Asia,” said ANZ Bank’s senior commodity strategist Daniel Hynes.

The rise in JKM reflects “an increasingly fierce competition between Asia and Europe for flexible LNG cargoes,” International Energy Agency’s Greg Molnár added.

Elsewhere in the LNG bunkering sector, the European Commission has approved the joint venture between TotalEnergies and CMA CGM, paving the way for further expansion of LNG bunkering operations across the EU. 

Norwegian shipping company Höegh Autoliners has ordered six additional LNG dual-fuel pure car and truck carriers (PCTCs) from China Merchants Heavy Industry (Jiangsu).

Chinese shipbuilder Nantong CIMC Sinopacific Offshore & Engineering (CIMC SOE) has commenced construction of two 20,000-cbm LNG bunker vessels.

Indian state-owned gas utility GAIL (India), Deendayal Port Authority (DPA) and classification society DNV have signed an agreement to assess the development of an LNG bunkering facility at Kandla Port.

The US Federal Maritime Commission (FMC) has upheld the inclusion of LNG and bio-LNG in the IMO’s Net-Zero Framework (NZF).

By Tuhin Roy

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