LNG Bunker Snapshot: Steep drop in Rotterdam amid lower delivery costs

LNG bunker prices have dropped alongside falling delivery margins in Rotterdam and weaker summer demand in Singapore.

PHOTO: Pavilion Energy's LNG bunker vessel Brassavola delivers a stem to a Rio Tinto-chartered bulk carrier. Pavilion Energy

Changes in weekly LNG bunker prices:

• Rotterdam down by $34/mt to $630/mt
• Singapore down by $8/mt to $771/mt

Rotterdam

Rotterdam’s LNG bunker price has declined by a steep $34/mt in the past week. Part of this drop has come as a result of a sharp decline in the front-month NYMEX Dutch TTF Natural Gas contract.

But it has also fallen because LNG bunker delivery costs are estimated to have gone down by $18/mt on the week, to $99/mt. More suppliers have been offering on LNG enquiries and this boosts competition in favour of negotiating prices down, a source says.

Europe's ample gas stockpiles have contributed to keep the TTF benchmark price below $11/MMBtu ($572/mt) in recent weeks.

“European storage is 80% full and we continue to hold a bearish view on TTF through the third quarter,” ING’s Warren Patterson said.

Steady gas flows from Norway have also reduced Europe’s LNG demand, which has remained below last year’s levels. Norway’s consistent supply of pipeline gas provides a more reliable and often cheaper alternative to LNG, reducing the need for LNG imports, a source says.

If the weather gets hot in Europe and people use more air condition, it could boost demand from the power sector and play a crucial role in mid-July and August. Temperatures in the next two weeks are expected to be higher than normal in some European countries, such as Germany, an analyst from Rystad Energy said.

Singapore

Singapore’s LNG bunker price has come down by $8/mt in the past week, driven by a lower NYMEX Japan/Korea Marker (JKM) price.

According to a report by the Japan Organization for Metals and Energy Security (JOGMEC), the JKM price trended downward last week due to low demand.

"Japan and South Korea have already procured the required number of cargoes for the summer season," JOGMEC stated.

In South Asia, and particularly India, monsoon rains have led to cooler weather, which has decreased electricity demand from the power sector, Rystad Energy said. When temperatures are cooler, less electricity is needed for air conditioning, reducing the need for gas-fired power generation.

This has also increased hydropower output, which is more competitive in price compared to gas during the monsoon season, the energy research company added. Hydropower plants generate electricity using water, which is abundant during the monsoon, making it a cheaper alternative to gas.

While Singapore's LNG bunker price fell, Rotterdam's fell by $26/mt more, to widen Singapore's premium to $141/mt.

By Debarati Bhattacharjee

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