US liquefaction terminals hit new utilization high as Asian prices top $12/MMBtu

Houston — US LNG feedgas demand hit a new record near 11.6 Bcf/d as Asian import prices continued to soar, S&P Global Platts Analytics data show.

The latest high was reached Dec. 13 across the six major liquefaction facilities on the Gulf and Atlantic coasts.

The Platts JKM for January was assessed 98.7 cents/MMBtu higher day on day at $12.213/MMBtu on Dec. 14. That's nearly double what JKM was trading at three weeks earlier and a more than a six-fold increase from JKM's historic low on April 28 at $1.825/MMBtu . The run-up has been driven largely by supply uncertainty in other exporting countries and demand from importing countries.

US Gulf Coast LNG netbacks from the JKM rose to nearly $6/MMBtu on Dec. 14, a roughly $4.80/MMBtu premium to the Dutch TTF netback.

European reloads are now well in the money, suggesting that re-exports from the continent should help dampen the JKM rally. However, fundamental to the widening spread has been worsening constraints at the Panama Canal, which has forced many US LNG exporters to re-route cargoes around the Cape of Good Hope and, in the process, draw more heavily on the spot shipping market.

The strong call on incremental shipping will likely continue to keep the spreads supported until regional supply outages are resolved, according to Platts Analytics.

How much higher US terminal utilization could go remains uncertain, as all of the facilities have recently been operating at or near full capacity. A sixth train at Cheniere's Sabine Pass terminal in Louisiana is expected to start up in 2022, while two new US LNG export terminals – one in Louisiana and one in Texas – are scheduled to begin production between 2022 and 2024.