Asian spot LNG prices rise slightly on US-China tariff truce

LONDON, May 16 (Reuters) - Asian spot liquefied natural gas (LNG) prices rose slightly for the second week running amid a slight uptick in demand as industrial sentiment improved following a 90-day tariff truce agreed by the United States and China during trade talks.
The average LNG price for July delivery into north-east Asia was at $11.75 per million British thermal units (mmBtu), up from $11.50/mmBtu last week, industry sources estimated.
"Activity has picked up somewhat and prices have started to trend upwards with some utilities and traders stepping in to pick up June cargos," said Toby Copson, chairman at Davenport Energy Partners.
He added that the market was not tight from a fundamental perspective but lower prices have tempted some buyers who need to satisfy their contractual volume obligations.
In April, China, the world's largest LNG buyer, recorded its lowest LNG demand since October 2022, and has been reselling U.S.-sourced LNG cargoes to Europe due to a tariff war with the United States.
A 90-day tariff truce was agreed by the United States and China during trade talks in Switzerland last weekend.
This could unblock some of the two-way trade brought to a standstill by the conflict between the world's two biggest economies. If a final deal between the two powers is agreed, it might spur economic activity in China and support a pick up in gas demand.
"While these tariffs are unlikely to have an effect on physical LNG flows, with China's 25% tariff on U.S. LNG still enough of an incentive for Chinese firms to send their U.S. cargoes elsewhere, the positive news supported industrial demand expectations," said Martin Senior, head of LNG pricing at Argus.
Go Katayama, LNG and gas analyst at data analytics firm Kpler said that further Asian price upside is possible driven by warmer-than-normal temperatures in Thailand.
In Europe, gas prices at the Dutch TTF hub remain range- bound between 34-35 euros per megawatt hour.
"While ample supply and subdued demand have kept prices capped, a persistently narrow JKM-TTF spread is prompting renewed price competition with Asia. Upcoming colder weather across Germany and central eastern Europe may nudge TTF prices higher," Kpler's Katayama said.
"The outlook remains range-bound due to relaxed EU storage targets and coupming maintenance at key regasification sites like Zeebrugge and Montoir," he added.
S&P Global Commodity Insights assessed its daily North West Europe LNG Marker (NWM) price benchmark for cargoes delivered in June on an ex-ship (DES) basis at $10.897/mmBtu on May 15, a $0.63/mmBtu discount to the June gas price at the TTF hub.
Argus assessed the price for June delivery at $10.845/mmBtu, while Spark Commodities assessed it at $10.946/mmBtu.
The U.S. arbitrage to north-east Asia via the Cape of Good Hope increased this week, marginally pointing to Europe, while the arbitrage via Panama continues to point to Asia, said Spark Commodities analyst Qasim Afghan.
In the LNG freight market, Atlantic rates showed their largest week-on-week drop since January and were assessed at $32,500/day on Friday, while Pacific rates remained relatively stable at $22,250/day, Afghan added.

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