ICIS TTF correlation with Asian LNG strengthens in 2024

• East Asian spot LNG and European gas strengthen pricing relationship in 2024
• Shift towards LNG as a form of baseload supply has consolidated the correlation between Europe and Asia
• In the absence of regional supply shocks, correlation should at least sustain in 2025

LONDON (ICIS)–Throughout 2024 the daily price correlation between European TTF and Asian spot LNG markets held above 90%, with the close connection likely to continue in 2025.

The correlation between both markets remained steady at 94% from the first to the third quarters, then falling a little to 91% in the fourth quarter.

This is based on the simultaneous ICIS TTF Early Day and ICIS East Asian Index assessments that close at 16:30 Singapore time.

The correlation reflects ongoing competition for volumes between the two regions, in addition to a number of Asian market participants using early-day swings in the TTF to provide guidance for outright Asian spot LNG prices.

The correlation is also obvious in daily market feedback where traders frequently cite fundamentals in the other region as influencing sentiment in their home market.

The recent near-perfect correlation between the two markets confirms the globalized nature of the gas market, and how each basin can at times influence sentiment in the other amid Europe’s greater dependency on LNG.

The correlation is expected to remain strong as Europe’s reliance on LNG will continue, and with market prices key in directing destination-free US LNG cargoes that can move to the highest-priced market, in turn flatting price differences between markets.

There are times when regional fundamentals lead to a disconnect between prices between the regions but these were short lived in 2024.

Without previous baseload Russian pipeline gas in Europe, the TTF is increasingly influenced by wider gas fundamentals, and can react quickly to issues outside Europe.

US LNG volumes continue to grow, now firmly over a fifth of the total global LNG market, with more new supply to come from Venture Global’s Plaquemines LNG and Cheniere’s Corpus Christi expansion in 2025.

Record low charter rates has also helped to narrow the price differential between the two markets, once again, strengthening the relationship between Europe and Asia.