Asian natural gas prices rallied to a fresh four-month high as utilities in the region stepped up efforts to compete with their counterparts in Europe.
The Japan-Korea Marker, the spot LNG benchmark for North Asia, surged 15% to the highest since March 8, according to S&P Global.
Several importers in Japan and South Korea are continuing to look for shipments for delivery in the fall and winter despite the jump in spot prices, traders said.
The European gas benchmark on Wednesday jumped to more than 10 times its usual level for the time of year and near a record set in March, after Russia reduced supply through a key pipeline.
That has dashed the hopes of Asian buyers that prices may cool and stepped up the urgency to secure supply before the critical winter heating season.
LNG shipments for delivery to North Asia are at a US$6 to US$8 per million Btu premium to Europe, which is wide enough to attract more shipments to the Pacific region, according to traders.
The Japan-Korea Marker jumped to almost US$52 per million British thermal units on Wednesday, more than triple the level this time last year.
It is not clear how long Asia’s premium to European LNG will last, especially as Russia supply concerns drive volatile price moves.
Many buyers in Asia can no longer wait to top up their long-term supplies with spot purchases as domestic inventories are dwindling and global tightness shows no sign of letting up.
Earlier this week Japan’s Inpex Corp bought a late-September delivery cargo for about US$47, one of the priciest shipments ever for an Asian nation, according to traders.