LONDON (ICIS)--European reloads – an important flexible source of supply in recent summers – have disappeared from view this year with current forward spreads meaning the arbitrage window is not open.
Europe’s location and depth of traded gas markets have supported reload activity in recent years, with more of a focus on sourcing volumes from northwest Europe than historically-favoured Spain.
But the global oversupply that kicked in from late 2018 has meant the market has other supply options.
The viability of reloads depends on a number of factors, including the availability of shipping.
Typically, an Asian price premium of $2.00/MMBtu or more to Europe has encouraged reloads from European terminals.
Asia’s premium to the Dutch TTF has collapsed in 2019 but in the last couple of weeks has edged back up to over $1/MMBtu for July.
The arrival of more US LNG to the market in the coming months should mean European reloads are not needed, even if Asian prices rise further above European gas markets.
But delays to US production and any cut in the availability of other Atlantic-basin supply could mean European reloads make an unlikely recovery in the event of strong Asian summer demand.
Indian and Middle East markets are well placed for European reloads, although Egypt has turned from importer to exporter over the last year.
Currently, the lack of LNG carriers in the Atlantic is pushing up prompt charter rates.