Wider discounts seen for prompt LNG cargo deliveries to Northwest Europe

Northwest Europe delivered LNG's discount to the Dutch TTF gas hub front-month contract price has widened significantly as cargoes fight for limited slots amid weaker-than-normal winter demand.

Opportunities to float longer to wait out the market -- given the sharp decline in shipping rates over the last month and a half -- have been fewer due to Asia's relative lack of buying appetite.

The impact has been felt on both sides of the Atlantic, with the US Gulf Coast FOB daily export cargo value sliding to an 11-week low Jan. 19.

"I am wondering how people who bought DES cargoes without being able to divert will survive," said a Europe-based trader.

S&P Global Platts assessed DES Northwest Europe for March at $21.791/MMBtu on Jan. 19. That represented a discount of $2.499/MMBtu to the assessed TTF March contract. Just the day before, the discount hit a record $2.658/MMBtu.

Just three weeks earlier, on the final day of 2021, NWE was at a premium to TTF. Since then, traders have reported slots in Europe being full or near full for prompt cargo deliveries.

Asia, meanwhile, has not seen the demand lift that is typical during the middle part of the winter. Inventory levels among most Asian power utilities are said to be healthy, amid mild temperatures.

Word that Chinese trader Unipec had issued a tender to sell up to 45 LNG cargoes from February to October furthered the bearish sentiment, in part because of the large number of LNG cargoes on offer and because it comes after a period of tight global gas supply.

"It would be difficult to find buyers at that level unless they have spare shipping capacity," said a second Europe-based trader.

Said a third Europe-based trader, "They will sell some, yes, but not 45."

Across the Atlantic, meanwhile, US FOB cargo values, which have been tracking European prices and lower shipping rates, have been under pressure.

Platts assessed the Gulf Coast Marker for March at $20.20/MMBtu on Jan. 19, down $1.70/MMBtu day on day and the lowest level since Nov. 1, 2021. Less than a month ago, on Dec. 21, GCM hit a record high at $54.95/MMBtu.

Panama Canal congestion remains low, with the maximum wait on Jan. 19 for unreserved LNG tankers transiting the passageway at three days northbound and three days southbound, according to the Panama Canal Authority.