The recent fall of the ICIS TTF front-month has pushed it to a year-low discount to East Asian spot LNG. However, the discount may have a limited impact on critical US LNG trade flows.

The TTF front-month Early Day market closed $1.14/MMBtu below the ICIS East Asia Index (EAX) on 1 December on weak European gas fundamentals – especially milder weather forecasts – before edging slightly closer to the EAX in subsequent sessions.

A deeper European price discount in theory means that its biggest supplier of LNG, the US, could swing exports to Asia just as peak winter demand comes in early 2026.

But limited LNG demand signals from Asia and higher recent spot charter rates will limit the immediate change in flexible cargo destinations, especially from the US.

IMPACT OF CHARTER RATES
A recent LNG vessel charter was reported in the mid $90,000s/day, down from recent highs.

The jump in prompt charter rates of recent weeks means European gas prices can fall to a wider discount to the EAX with limited impact because of higher shipping costs from the US Gulf to Asia.

ICIS shipping data shows that round-trip shipping to Japan from the US Gulf on a TFDE vessel chartered at $20,000/day is $0.90/MMBtu more than to the Netherlands.

But with a $100,000/day charter the difference rises to $1.40/MMBtu.

The spread between European gas and Asian spot LNG markets is not sufficient to cover this difference.

The recent rise of charter rates to above $100,000/day only impacts a small portion of the LNG fleet but it may mean long-term charterers who locked in at lower rates consider sub-letting their tonnage rather than pushing volumes to Asia.

ASIAN DEMAND
The other critical element is Asian LNG demand.

The recent wider spread has been triggered by a fall in European gas markets rather than a strong indication of East Asian prompt LNG demand.

US sources continue to base US Gulf FOB assessments on a TTF netback rather than one to Asia, still seeing Europe as the predominant marginal buyer.

Recent Asian buy tenders do not cover significant volumes and sources even report some selling positions from large China companies for January.

WHAT NEXT?
ICIS expects shipping length to persist in 2026 on the large number of new vessels coming to the market.

It is normal for charter rates to rise over the winter and this year’s spike has been less than in previous years.

Charter rates are likely to fall over the first quarter which could help to narrow the price spread between Europe and Asia unless there is a shift in fundamentals in one of the regions.

US LNG BREAKEVEN?
The spread between the ICIS TTF front-month and full-run US LNG costs into Europe has come closer to breakeven in recent weeks.

Including all costs to bring US LNG into Europe – US Henry Hub feedgas, liquefaction costs, shipping and regasification – could bring the current cost to just over $9/MMBtu, although there are a number of variables for different offtakers.

It is possible that the full-run cost could move above the TTF front-month at points of European gas weakness in 2026.

But this will not likely impact US trade flows.

US LNG sellers have enjoyed years of strong margins, being able to cover all costs, but the next years will bring a period of lower margins.

History shows the ultimate breakeven price at which US buyers may cancel cargoes is the outright Henry Hub prices, which will remain well below TTF prices, at least in 2026.
Source: ICIS by Edward Cox, https://www.icis.com/explore/resources/news/2025/12/04/11161676/higher-charter-rates-push-ttf-further-below-asia-spot-lng-what-next/