Asia LNG Price Surges to Record as War Spurs ‘Panic’ Over Supply

(Bloomberg) -- Spot prices for North Asia's liquefied natural gas surged to a record as Russian supply concerns intensified competition with Europe for available supply of the super-chilled fuel.

The Japan-Korea Marker, the spot Asian LNG benchmark, jumped 23% to $59.672 per million British thermal units on Thursday, according to S&P Global Platts, pulled higher by a historic rally in European gas prices.

“Panic spread through the international gas markets over supply availability due to the Russia-Ukraine conflict,” according to S&P Global Commodity Insights.

While only a handful of Asian importers are currently seeking spot LNG cargoes, they will need to pay sky-high rates to attract shipments away from Europe, according to traders surveyed by Bloomberg.

Russia's invasion of Ukraine and sanctions aimed at Moscow have added risk to an already tight global gas market. The conflict has upended commodities, with the world already in the grip of inflation amid the recovery from the pandemic.

Asian LNG buyers are avoiding further purchases from Russia due to the quickly evolving wave of sanctions from the West, which is further tightening global supplies. Suppliers are adding clauses to spot contracts that allow buyers to turn down shipments from Russia.

Still, the sudden surge in Asian LNG prices is beginning to spark demand destruction, as many importers are unable to purchase cargoes at current rates. The JKM spot rate is trading at roughly a $5 discount to Europe, the biggest discount since January amid “fears over Asian LNG demand being able to be sustained at today's price levels,” according to Platts.

The Asian spot price has roughly doubled in the last week, with Thursday's level surpassing the previous record set in October amid fears of a tight winter.

• Intraday value for 1H April DES cargo to JKTC assessed at $43.40/mmbtu on Friday, -$8.60 from the previous session, according to S&P Global Platts
  • 2H April -$8.60 to $43.35
• No bids and offers were made on S&P Global Platts JKM LNG Market on Close

Buy tenders:

Company	Cargoes	Destination	Delivery	Bids Due	Valid Until
H-Energy	22-24 cargoes	India	2022-2024	March 11
Gail	1 DES cargo/month	Dhamra, India	Jan. 2023- Dec. 2032	March 14

Sell tenders:

Company	Cargoes	Port	Loading/Delivery	Bids Due	Valid Until
Adnoc	1 FOB cargo	Abu Dhabi	April 26-28	March 8

Other Markets

European natural gas futures declined, following a day of extreme volatility in the market amid the war in Ukraine Oil headed for the biggest weekly surge in almost two years after Russia's invasion of Ukraine roiled global markets and fueled fears of a supply crunch, driving prices to their highest since 2008 Commodities extended their massive rally as Russia's invasion of Ukraine continues to roil global markets and fuel fears of supply crunches

News & Research

European Gas Futures Decline After a Day of Extreme Volatility $1.7 Billion LNG Fund Would Only Get Germany a Week of Gas: BNEF Bans on Russian LNG at European Ports Will Impact China: BNEF U.S. LNG More Profitable to Europe; JKM-TTF Spread Shrinks: BNEF Europe Faces Winter Gas Crunch If Russia Cuts Flows: BNEF Chart Biden Called to Unleash Shale to Counter Deepening Energy Crisis Lithuania LNG Terminal Stops Servicing Russia's Novatek Cargoes Russian Forces Occupy Site of Nuclear Plant as Fire Contained Korea Cuts Run-Rate at Nuclear Reactors After Fire Near Plant

©2022 Bloomberg L.P.

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