Six US LNG cargoes diverted to Europe by LNG traders

Analysts and shipping data indicate that traders diverted six cargoes of LNG bound for Asia into Europe in the first half of this month due to higher European prices, and weaker Asian demand.

Weather forecasts indicate lower temperatures for northwest Europe.

Data from analytics firm Kpler revealed that the vessels were loaded in America and initially headed for China, South Korea Thailand and Singapore. Between Jan. 8-14, the vessels changed course in the Atlantic Ocean and were destined for Europe.

The diversions occur because Asian prices don't keep a sufficient premium over European prices to attract the cargoes," Martin Senior, Head of LNG Pricing at Argus said, adding that almost all Atlantic basin cargoes head towards Europe.

Asian Spot LNG Demand has fallen for two weeks in a row as a result of the large inventory levels in East Asia, and spot prices around $14 per million British Thermal Units (mmBtu), which are seen by some as being too high. Prices have fallen nearly 5% from the beginning of the year, to $13.90/mmBtu last Friday.

The benchmark front-month contract for the Dutch TTF hub was closed on Friday at 47.40 Euros per megawatt hour, or 14.27 mmBtu.

Both the Bushu Maru (which loaded at Freeport LNG) and Flex Vigilant (which diverted to Europe respectively on Jan. 8, and Jan. 13), were diverted from their original course. Flex Vigilant originally headed for Thailand.

Grace Dahlia chartered by Glencore was loaded at Calcasieu Pass. Originally bound for China, it was diverted to Turkey on January 8.

After loading at Cameron LNG, Mitsubishi-controlled Diamond Gas Crystal diverted its route on Jan. 13, changing its destination from South Korea to Europe. LSEG data indicates that it is headed to Rotterdam, Netherlands.

After loading at Sabine Pass, the tankers Maran Gas Sparta (Glencore) and Gaslog Georgetown (Cheniere Energy) diverted to the Netherlands on Jan. 10, and respectively Jan. 14. Maran Gas Sparta, owned by Glencore, was originally heading to China before turning to the Netherlands. Gaslog Georgetown, chartered by Cheniere Energy and headed to Singapore was diverted to the Netherlands on Jan. 10 and 14, respectively.

Go Katayama, Kpler analyst, said: "We have seen China reselling more recently. They are reselling in Europe or Asia. Second-tier players do it because they lack storage capacity."

He said that high LNG prices and weak demand in the domestic market discouraged buyers from buying more gas, while Russian pipeline and domestic production has increased year-on-year.

(source: Reuters)