Gas prices have remained below the €30 mark so far this week. From Christmas onwards, it is expected to become significantly colder, with weak renewable electricity production at the same time. Last year, a similar constellation led to a pronounced rally.
Christmas rally last year
Last year, spot prices rose by more than 25 percent in the second half of December until the beginning of January. This was due to weak renewable electricity production combined with weaker-than-expected LNG supply.
According to the latest weather forecasts, average daily temperatures in Germany are expected to fall to around zero degrees Celsius from Christmas until the end of the year, which is up to 3 degrees below the seasonal norm.
Wind power production in most European countries is expected to be below average, although forecasts for the holiday season have recently been revised significantly upward.
Rising demand for LNG in Asia
So far this month, LNG imports have remained at the same level as last month, but only 25 further deliveries are currently expected at European terminals by the end of the month. This means that total imports in December could potentially fall below last month’s strong level.
One of the reasons for this is rising demand in Asia. The five largest Asian countries (China, Japan, South Korea, Taiwan, and India) have imported over 170 LNG deliveries so far this month, which is around 20 deliveries more than at the same time last month.
In addition, China’s LNG stocks have fallen slightly compared to the previous month and most recently stood at 7.5 million tons of LNG (previous month: 7.8 million tons of LNG). It can therefore be assumed that Chinese players will potentially increase their spot purchases of LNG in January, which should support LNG prices in Asia.
Chinese LNG exchange prices from 2026
The Shanghai Futures Exchange is expected to introduce an LNG futures product in the first quarter of 2026, which will provide market participants involved in Chinese LNG trading with an instrument for hedging their positions.
The contract will be open to all companies involved in the purchase or sale of LNG in China, including international traders and energy companies.
Until now, the Japan-Korea Maker (JKM) from the trading house S&P Global has mostly been used as the benchmark for prices in Asia and China. Alongside Japan, China is the largest LNG importer in the region. The size and liquidity of the Chinese market could support the success of the futures product on the market.
TTF/Henry Hub spread recovers slightly
After falling to a multi-year low of around USD 4/MMBtu at the beginning of the month, the spread has recently recovered to just under USD 5/MMBtu.
The low spread had led to fears of possible freight cancellations, which have not materialized so far. However, the TTF/Henry Hub spread is likely to widen again in the first quarter, as most analysts expect Henry Hub prices to fall again.
US LNG deliveries to Europe should therefore remain profitable in the first quarter of 2026. This is due to lower Henry Hub forward curve prices, falling regasification costs, and sharply declining freight rates on the Atlantic.