Over LNG 10 cargoes have been diverted from a heading to Asia instead to Europe so far in 2025, driven by premium prices in Europe that could cause further cargoes to be redirected, according to traders.

ICIS data has so far recorded five US LNG cargoes switching direction towards European markets, and one to Turkey, while on the water in the past two weeks, with several more deals meaning more are expected to come.

Others may have made the decision to switch to Europe at the point of loading and not show a change in direction while on the water.

A source said in the first week of January that seven diversions were already taking place or planned, including from Singapore and Japan-based traders.

The latest cargo to be diverted on 13 January was the 174,000cbm Flex Vigilant.

The vessel, with a US Freeport cargo, was heading towards Asia, signaling for Thailand for 9 February, but turned north and updated its ETA to 23 January, suggesting a nearer destination in Europe instead.

Other recent diversions include Diamond Gas’ Diamond Gas Crystal from the Cameron plant in the US, after earlier signaling a destination of Japan, the Bushu Maru, the Grace Dahlia and the Maran Gas Sparta.

“Diversions even started when Asian spot LNG was still at a premium to TTF of $0.45/MMBtu,” said one Europe-based trader this week, estimating over 10 cargoes diverted for loaded and soon-to-be loaded cargoes. “Now cargoes have been diverted and the spread widened again for February.”

ICIS has recorded an average TTF discount to the ICIS East Asian LNG index between 1-13 January of -$0.11/MMBtu, rising on 13 January to a TTF premium of $0.898/MMBtu – the highest since 2023.

This could trigger further diversions.

The average European discount does not consider the longer journey time and chartering costs to send US LNG cargoes to Asia.

Many of the cargoes may have been sold to European buyers on a prompt basis.

In the future, more US LNG sellers are likely to hold European regas capacity and be able to place cargoes directly into the market.

Any TTF premium to Asia would make for clearly higher margins sending US LNG to Europe if the seller can find a buyer or has its own regasification position.
Sources pointed to weak demand in Asia as a key driver for the diversions, particularly as China prepares for its annual Spring Festival and markets there slow down in response.

This has fed into the changing price spread, where US LNG sellers will constantly be monitoring European and Asian netbacks and adjusting positions.

TTF prices have received relatively more support from falling stocks, comparatively colder weather and short-term signs of lower feedgas nominations to US LNG plants.

Europe may well need to maintain parity, or a small premium, to Asian markets into the storage injection season later in the year.

HOW DIVERSIONS ARE AGREED

To ensure that a TTF premium is captured, “the most straightforward way would be on the paper side …to hedge your price risk exposure on the physical side,” with costs factored in.

The diversions in this market can also favor shipowners and operators.

“Right now it is hard to see how an owner would complain being given a short ballast back to the US Gulf instead of a long ballast back from the Far East, when rates are so low and the eastern freight market is so weak,” said a trader.

The source added if the vessel diverting to Europe from Asia was intended for further trade or dry-dock in the east, an “agreement would need to be struck to compensate the longer ballast voyage and costs incurred to the owner from diverting into Europe”.

Diversions can be arranged for spot and some contractual volumes.

The destination-free structure of US FOB contracts is perfect for these kind of short-term diversions.

DES contracts can be more problematic, and in general must have consent from the seller as they bear the risk of the cargo until after it has been delivered.

Source: ICIS by Clare Pennington