Freeport LNG in the US resumed production from all three trains on 28 July, after a hurricane-related shutdown earlier this month.

In Asia, supply has been reduced after a train at Australia's Ichthys LNG faced an outage on 19 July and is likely to stay at reduced capacity in August.

Asian spot liquefied natural gas (LNG) prices for September traded 4.9% higher week-on-week at around $12.6 per million British thermal units (MMBtu) on 30 July.

In Europe, the Title Transfer Facility (TTF) for August traded at around $10.9 per MMBtu on 30 July, up 8.7% from last week as heatwaves boosted LNG demand.
Asia faces reduced supply from Ichthys

The Ichthys LNG Train 2 in Australia, which has an annual capacity of 4.45 million tonnes (Mt), was operating at around 80% capacity on 30 July, after facing an outage on 19 July.

The train is also likely to operate at reduced capacity in August.

The top destination for Ichthys LNG in 2024 as of 31 July was the Yung-An regasification terminal in Taiwan, followed by the Futtsu and Himeji ports in Japan.

However, Japan remained the top importer of LNG, with combined discharge volume from 1 January to 30 July at 3 Mt, comprising 60% of Ichthys LNG’s export destination this year to date.

Trading activity for Asian spot LNG financial derivatives has already shifted from September to October in the week beginning 22 July, which traded 6% higher for the week at around $12.8 on 30 July.

Asia remains the preferred destination over Europe for US free-on-board (FOB) LNG cargoes as the arbitrage remains open as of 30 July.

Some East Asian importers, such as Japanese energy company Kyushu Electric and China-based energy distributor ENN, have bought cargoes for the end of August or early September as well as September, respectively, although Kyushu Electric also sold a cargo for end-October.

While Japan is facing stronger downstream demand in the prompt, some Japanese importers, such as Japan’s largest gas utility Tokyo Gas and electric utility firm Kansai Electric, were offering late September and mid-October delivery cargoes, respectively.

In the Japanese power market, day-ahead power prices remain elevated due to the ongoing heatwave, with prices ranging from JPY 15 to JPY 20 ($0.10 to $0.13) per kilowatt-hour (kWh) for the week as of 31 July.

Prior to early July, the last time day-ahead prices surpassed JPY 20 per kWh was in September 2023.

On 31 July, major power utilities in Japan reported combined LNG storage levels of 2.15 Mt for 28 July.

This is down 8.5% week-on-week, and at a lower level of 1.94 Mt for end of July 2023.

It is also 1.8% higher than the five-year average of 2.19 Mt for the end of July from 2019 to 2023.

The 350-megawatt (MW) Kashima Kyodo unit 3 faced an unexpected outage at its turbine on 19 July, and remains offline as of 31 July.

For competing fuels, Nippon Steel’s 133-MW coal-fired power plant Hirohata unit 7 faced an outage on 28 July but resumed operations on 31 July.

Nippon’s Steel’s 330-MW Oita unit 9 also went offline on 30 July, and its restart date has yet to be announced.

In terms of future nuclear restarts, Japan’s Nuclear Regulation Authority effectively rejected the restart of Japan Atomic Power’s Tsuruga Nuclear Power Plant unit 2 with a nameplate capacity of 1.16 gigawatts (GW) on 26 July.

In South Korea, the 1-GW nuclear power plant Hanul unit 3 began planned maintenance on 27 July, while five other units are already offline for maintenance works.

Meanwhile, Taiwan (China) also decommissioned its second-to-last reactor at its Maanshan nuclear power plant operated by Taipower on 27 July.

Elsewhere, Indian energy conglomerate Gujarat State Petroleum Corporation purchased an early September to early October cargo, while oil and gas company Petronet ended up not fulfilling its requirement for a mid-September delivery via a tender.

In the forward market, South Korean importer Posco was seeking six to eight LNG cargoes for September 2025 to August 2026 delivery.

Indian energy and utility company Torrent Power has issued a tender seeking six cargoes per year for the Dahej terminal in Gujarat with a duration of 10 years from 2027, linked to either Brent or Henry Hub prices. Offers are due on 16 August.

European prices inch up on southern heatwaves

LNG for September delivery to northwest Europe traded at $10.9 per MMBtu on 30 July, 7% higher week-on-week. Heatwaves in Spain, Portugal and the south of France have contributed to higher prices and led to the region importing more spot LNG to meet demand.

Total pipeline flows from Norway into Europe were up 5.6% week-on-week to around 338.5 million cubic meters per day (MMcmd) on 30 July. Norwegian operator Equinor is currently facing an outage at the Visund field with an uncertain duration, while the Kaarsto gas-processing facility is undergoing its annual maintenance until early August.

Meanwhile, gas pipeline flows from Russia to Europe were down 4.8% week-on-week to about 91.5 MMcmd as of 28 July, and are also lower than the 96.2 MMcmd on 28 July 2023. However, underground storage held by European Union (EU) countries was at around 84.7%, only slightly lower than the 85.3% in the same period of 2023.

In the Middle East, Egypt is likely to have bought five LNG cargoes for August to September delivery via a buy-tender on 29 July. Turkey is also seeking volumes for 2027 to 2037 via long-term contracts.

US Freeport resumes operation for all three trains

The front-month Henry Hub gas price fell 2.8% week-on-week to $2.1 per MMBtu on 30 July.

Dry gas production is maintaining an output of around 102 billion cubic feet per day.

Freeport LNG resumed operations at all three trains, as feedgas levels returned to over 2 billion cubic feet per day on 28 July.

We expect operators to increase activity later this year given the contango in the forward curve (contango: higher futures prices than spot prices).

Producers are banking on higher forward prices to support their current capital expenditure guidance, which has stayed relatively the same.

As for demand, the US faced record high gas-for-power generation last week.

This was supported by robust demand across most of the US, except in central US and Texas.

However, forecasts are projecting warmer weather until early August, so power demand is likely going to remain strong.

Stronger demand will help cushion the market from elevated supply levels.

Yet it is important to note that demand has struggled to make a dent in weekly storage, which is still 16% above the five-year average.