Last week, Atlantic rates continued to decrease.
“Spark30S Atlantic rates experienced a weekly increase for the first time in six weeks, rising by $2,000 to $59,750 per day,” Qasim Afghan, Spark’s commercial analyst told LNG Prime on Friday.
He said Spark25S Pacific rates continued to decline for a sixth week, falling by $500 to $73,000 per day.
“Currently, average September freight rates in both basins are on track to be the lowest since 2020,” Afghan said.
Image: Spark
Timera Energy said in a report on Thursday that two factors have largely driven this seasonal weakness in spot freight rates.
The consultancy said JKM-TTF spreads narrowed across August-September as TTF month-ahead prices rose in response to perceived supply risks despite ample European storage.
Narrower JKM-TTF spreads attract more marginal LNG supply to Europe, improving vessel availability through shorter average voyage times.
Timera Energy said year-on-year charter rate weakness can also be attributed to the absence of a steep October-December contango across the forward curve (another effect of recent TTF month-ahead strength).
The consultancy said that in 2022 and 2023, this winter contango incentivized traders to float loaded LNG cargoes into later-dated winter contracts, causing charter rates to surge.
In Europe, the SparkNWE DES LNG front month continued to decrease this week.
“The SparkNWE DES LNG front month price for October delivery is assessed at $10.650/MMBtu, marking the third consecutive weekly decrease and falling by $2.1/MMBtu since the first assessment just under three weeks ago,” Afghan said.
“The discount to the TTF narrowed by $0.035 this week to $0.14/MMBtu,” Afghan said.
Image: Spark
Data by Gas Infrastructure Europe (GIE) shows that volumes in gas storages in the EU continued to rise and were 93.45 percent full on September 18.
Gas storages were 93.24 percent full on September 11, and 94.11 percent full on September 18, 2023.
In Asia, JKM, the price for LNG cargoes delivered to Northeast Asia in November settled at $12.830/MMBtu on Thursday.
Last week, JKM for October settled at 13.674/MMBtu on Friday, September 13.
Front month JKM then fell to 13.130/MMBtu on Monday. It rose to 13.300/MMBtu on Tuesday and then dropped to 13.220/MMBtu on Wednesday.
State-run Japan Organization for Metals and Energy Security (JOGMEC) said in a report earlier this week that JKM for last week (September 9 – 13) was almost unchanged at mid-$13s on September 13 from mid-$13s the previous weekend.
JKM fell to a five-week low of mid-$12s on September 12 due to general declines in TTF and oil prices.
JOGMEC said the price rebounded on September 13 due to a rise in demand in Northeast Asia.
S&P Global Commodity Insights said in a report on Wednesday that the East-West LNG arbitrage economics is strengthening as wider price spreads and declining freight rates offer traders more opportunities to move cargoes to the Far East.
The potential netback from transporting a US-sourced cargo to the Far East has shifted from negative to positive territory, suggesting that traders may have increased opportunities to divert these cargoes and achieve higher margins, the report said.
The Platts-assessed East-West arbitrage rose to 1.7 cents/MMBtu on September 17 from minus 23.9 cents/MMBtu on September 10, considering the Cape of Good Hope freight rate cost for delivering a US-sourced cargo to the Northeast Asian region, it said.
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