Evgenia Vanadzina Gasum

Evgenia Vanadzina

Analyst
evgenia.vanadzina@gasum.com
tel. +358401801066

19.01.2021  

Maritime market update: LNG price spike to boost the appetite to invest in future projects

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Risavika LNG front month reached 30.20 EUR/MWh sideways to last week. European gas prices remained supported by tightened supply and cold weather outlook. However, the weather forecast for the rest of the January and beginning of February shows higher than seasonal norms temperatures, which can reduce demand for gas, thus, reduce gas prices for front month.

Oil products showed a slight increase of 0.5-1 % for most of the products. However, fuel oil 3.5 has dropped by 3 % and closed at 309.35 USD/t for Feb contracts. Low sulfur oil (MFO 0.5) has increased by 0.5 % and closed at 402.37 USD/t, and MGO 0.1 has increased by 1 % week on week and closed at 444.93 USD/t.

A cold snap has hit Japan and much of north-east Asia in recent weeks, Japanese utilities have had to scramble to source fuel supplies. Prices for LNG cargoes in the Asian spot market have soared to record levels this week as the cold snap hit, up almost 20 fold from just a few months ago when the market was seen as oversupplied. Energy traders have diverted every LNG cargo they can towards the Asian market, with China and South Korea also scrambling to buy. Many uncommitted cargoes were diverted from European market toward Asian, tightening supply in Europe during cold period and leading to highest in two years prices in Europe. According to FT sources, LNG price spike would have long-term ramifications for the industry, from boosting the appetite to invest in future projects to making utilities think long and hard about how to source cargoes long-term.

 

 

Front Month Price index

LNG Risavika*

LBG blend

Risavika**

FO 3.5 FOB Rdam

MFO 0.5 FOB Rdam

MGO 0.1 FOB ARA

ULSD FOB ARA

Unit

30.20

33.20

22.18

27.63

30.55

32.39

EUR/MWh

511.61

562.43

309.35

402.37

444.93

451.73

USD/t

LNG Risavika - LNG FOB Risavika 

LBG Risavika 10 % - 10 % blend of Liquified Biogas

FO 3.5 FOB Rdam – European 3.5% Fuel Oil Barges FOB Rdam (Platts) Futures Quotes

MFO 0.5 FOB Rdam - European FOB Rdam Marine Fuel 0.5% Barges (Platts) Futures Quotes

MGO 0.1 FOB ARA - Gasoil 0.1% Barges FOB ARA (Platts) Futures Quotes

ULSD FOB ARA - European Diesel 10 ppm Barges FOB ARA (Platts) Futures Quotes

 

Source: CME Group, Gasum, Financial Times

*An estimate for LNG FOB Risavika 

** An estimate for 10 % LBG blend FOB Risavika