New Delhi, March 15
Despite improvements in drought-related restrictions at the Panama Canal, US liquefied natural gas (LNG) shipments to Asia continue to traverse the longer route around the Cape of Good Hope due to escalating risks in the Red Sea.
According to S&P Global Commodity Insights, the journey around the southern tip of Africa has become a preferred alternative for LNG exporters, with the latest data indicating a significant uptick in this maritime path.
In March 2024, around 710,000 metric tons (mt) of US LNG were delivered to Asia, with all volumes transiting through the Cape of Good Hope, according to data from S&P Global Commodity Insights.
No US LNG volumes have been transported to Asia via the Suez or Panama canals this month. The last US cargo to reach Asia via the Suez Canal arrived in Japan on January 27.
Following a historic drought affecting the Panama Canal and escalating tensions in the Red Sea, more US LNG volumes have opted for the longer route around the Cape of Good Hope.
In 2024, 46 US LNG cargoes have reached Asia via this route, compared to 66 for the entire year of 2023. The trend indicates a significant shift away from traditional transit paths.
While US LNG shipments through the Cape of Good Hope have surged, only 13 cargoes have passed through the Panama Canal to Asia this year, compared to 145 in 2023.
Similarly, only seven US cargoes have traveled through the Suez Canal in 2024 to reach Asia, a stark decline from the 120 shipments in the previous year.
Despite supply-side risks in the LNG market, the temporary pause in LNG export authorizations announced by the Biden administration in January has not impacted US gas balances or prices significantly.
The Platts Gulf Coast Marker for US FOB cargoes loading 30-60 days forward was assessed at USD 7.13/MMBtu on March 14, showing a modest increase.
Freight rates for LNG shipping remain relatively steady, with limited inter-basin arbitrage opportunities.
The LNG market across Europe and Asia remains comfortably stocked to manage any uptick in demand ahead of the injection season.
The maritime journey of US LNG cargoes reflects the dynamic nature of global shipping routes and geopolitical risks impacting trade patterns.
Despite challenges, LNG exporters are adapting to ensure timely deliveries while navigating through complex market dynamics and shipping constraints.