LNG Price Gap Seen by DNB Boosting Ship Rates Through Spring

The gap between liquefied natural gas prices in Asia and the Atlantic will keep trades between the regions profitable through the Northern Hemisphere spring, boosting shipping rates, according to DNB Markets.

Spot prices in northeast Asia rose to $19.1 per million British thermal units, 25 percent higher than long-term contracts, Oslo-based analysts led by Nicolay Dyvik said in an e-mailed report today. Argentina is paying $14 to $18 as the country is still seeking 28 of the 80 cargoes it needs in 2013, according to the report.

“Demand is plenty, and the fact that Asian April delivery price assessments are above 18 indicates that the Atlantic-Asia arbitrage will stay open into spring, which will contribute to keeping LNG shipping spot prices high,” Dyvik said. An arbitrage exists when the price of a commodity exceeds the cost of buying and transporting it from another region.

At the same time, further delays to the Angola LNG export facility will limit the supply of LNG and add seven vessels dedicated to the project to compete for spot cargoes instead, according to the report.

To contact the reporter on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

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