LNG Bunker Snapshot: Singapore-ARA spread nearly triples as benchmarks diverge
Singapore-ARA spread widens to $244/mt
Baltic delivery premium up as ARA holds flat
US-Iran peace talk hopes drive TTF lower
Weekly changes in LNG bunker prices:
- ARA down by $73/mt to $975/mt
- Singapore up by $88/mt to $1,218/mt
- Baltics down by $48/mt to $1,082/mt
- Portugal down by $115/mt to $1,094/mt
Europe
Front-month TTF has fallen $1.41/MMBtu ($73/mt) lower as markets have reacted to progress in US-Iran negotiations. ING Bank commodity strategist Warren Patterson noted that European natural gas prices have come under "renewed pressure amid the progress in talks" over a potential reopening of the Strait of Hormuz.
ARA bunker prices have fallen in step with TTF, leaving delivery premiums flat on the week. The Baltics have dropped less than TTF, with delivery premiums widening by around $25/mt.
Portugal has fallen $115/mt, well beyond the TTF move, though its pricing remains only loosely tied to the European benchmark.
Despite the bearish momentum, Patterson noted that EU gas storage sits at around 38% full, well below the five-year average of 52%. Mind Energy has flagged a likely rebound, noting that geopolitical uncertainty remains "still huge."
The International Energy Agency’s (IEA) Greg Molnar said the global market has been gradually rebalancing despite the loss of almost 20% of LNG supply from the Hormuz crisis. Non-Qatari LNG supply has grown by 12 billion cbm year-on-year in March and April, largely driven by new US, Canadian and African projects. The US Department of Energy has also authorised Plaquemines LNG to lift exports by 13%, Molnar noted.
On the demand side, stronger renewables output in Europe has depressed gas burn in the power sector, easing some pressure on restocking efforts, according to Molnar.
Asia
Singapore's LNG bunker price has risen in lockstep with front-month JKM, which has climbed $1.70/MMBtu ($88/mt) on the week.
The move has widened the Singapore-ARA spread from $82/mt to $244/mt, nearly tripling in a single week as the underlying gas benchmarks have pulled in opposite directions.
ANZ Bank commodity strategist Daniel Hynes said North Asian LNG prices have slid, compounded by reports that three tankers have crossed the Strait of Hormuz in recent days.
Separately, the IEA's Molnar noted that seven LNG cargoes appear to have passed through the strait in May, though this remains a fraction of the roughly 100 monthly shipments before the crisis.
Asian LNG demand fundamentals have remained firm. Key importers have leaned on gas-to-coal switching to manage supplies, with China's LNG imports down 25% year-on-year, according to Molnar. But a hotter summer could trigger more aggressive procurement and heighten competition with Europe for cargoes, he warned.
In other LNG bunker news, Axpo completed its first LNG bunkering of a cruise ship in Naples, delivering fuel to Princess Cruises' Sun Princess via its bunker tanker Green Zeebrugge.
The Port of Valencia has granted six-year LNG supply licences to Shell and Axpo, covering the ports of Valencia, Sagunto and Gandia.
Mitsui O.S.K. Lines (MOL) has signed an annual LNG bunker contract with Seaspan Energy for its car carriers to be bunkered in the Port of Vancouver.
Bernhard Schulte Shipmanagement launched the LNG dual-fuel liquefied CO2 carrier Northern Purpose at Dalian Shipbuilding Offshore in China. The vessel will transport captured CO2 across Northwest Europe to Norway for permanent storage.
By Erik Hoffmann
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