US LNG Exports Stall In July Despite Higher Global Gas Prices
American liquefied natural gas producers were unable to capitalise on a rally in global gas prices during July, as maintenance work and seasonally lower production held export volumes close to the previous month's level. Shipments slipped to 10.48 million tonnes from 10.6 million in June, according to preliminary ship-tracking data, at a time when both the Asian and European benchmarks were trading well above their June averages.
The timing is a function of physics rather than commercial judgement. Exporters traditionally schedule maintenance for the summer because warmer ambient temperatures make it less efficient to cool natural gas to liquid, so the months when prices are often strongest are also the months when plants are least productive. Several facilities took the opportunity this year, including the country's third-largest export terminal.
The price signals were unusually clear. The Asian benchmark averaged 19.10 dollars per million British thermal units in July, holding a premium over the European benchmark at 18.07 dollars. In June the European benchmark had averaged 13.19 dollars against 17.33 for Asia, which means both markets moved sharply higher while American output did not. An analyst at a gas consultancy said American projects have been running above nameplate capacity for a year or two and, while they would like to produce more, are not prepared to defer maintenance and risk unscheduled outages later.
The destination pattern shows sellers with little spare cargo to redirect. Europe remained the largest market, taking 4.76 million tonnes against 4.41 million in June and accounting for nearly half of all American exports as the continent rebuilt inventories ahead of winter. Asia took 3.32 million tonnes, barely changed from 3.25 million, despite the premium that would normally pull cargoes east. That gap between the arbitrage signal and the flow is the clearest evidence that the constraint was supply rather than choice.
Latin America climbed to 1.07 million tonnes from 0.96 million as southern hemisphere winter demand rose, with Brazil leading, even as Trinidad and Tobago returned a liquefaction train to service and shipped more than half a million tonnes into the same regional market. Egypt, an increasingly significant buyer this year as it addresses domestic shortages, fell from a record 1.06 million tonnes in June to 0.63 million. One cargo went to Senegal, and vessels carrying a combined 0.63 million tonnes were still at sea at the end of the month without a declared destination.
