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Asia spot stays near 3-year high for third week

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Reuters are reporting that Asian spot LNG prices were unchanged for a third week as traders converged on Lisbon for a major industry conference.

Spot prices LNG-AS for January delivery were steady at US$9.85 per mmBtu.

A combination of factors including purchases by Taiwan and Turkey; below-average temperatures in Beijing, Tokyo and Seoul; nuclear restart delays in Japan; export curbs in Indonesia; and price spikes in Spain helped keep prices near three-year highs.

A Singapore-based trader said that PetroChina was back in the market, potentially seeking January cargoes.

Taiwan paid an estimated US$9.90 per mmBtu for a January cargo and may be seeking further supply for February and beyond.

Turkey purchased several December deliveries.

LNG demand from Japanese utilities Kansai Electric and Kyushu Electric might resurface from January following delays to restarting nuclear power plants by two months to perform quality checks.

However, the likelihood of Kansai restarting a reactor at its Ohi plant in January was somewhat uncertain to begin with, clouding the impact of the delay on LNG demand.

Indonesia’s giant Bontang export plant was operating up to 20% below capacity after the liquefied petroleum gas (LPG) spiking facility, used to enrich the lean gas from Eni’s Jangkrik field offshore, experienced technical problems.

The LPG facility glitch meant the quality of the LNG exported from Bontang could not be easily maintained, curbing output.

A Japanese off-taker from Bontang said domestic buyers were generally well stocked and delivery delays arising from the incident were not big enough to warrant major replacement buying, though one or two utilities may seek spot cargoes.

Below-average temperatures in key LNG consuming markets across Asia should help support demand. Tokyo temperatures are forecast to drop to 5°C – several degrees below average – from early December and stay there until January.

In Seoul and Beijing, temperatures should drop to minus 5°C from next week.

Bids for a three-cargo buy tender for delivery May, August and October by India’s Bharat Petroleum were submitted this week with an award due on 12 December.

Pakistan LNG also took bids for its tender seeking four cargoes in February.

In the Atlantic Basin, Spanish gas prices spiked to above US$9.20 per mmBtu, as sparse rain and wind depleted hydroelectric and wind power plants and lifted demand for gas-fired power stations to fill the gap.

A trader said bids from Spain are not yet high enough to attract LNG. If the current supply tightness persists this could change.

No new buy tenders are expected from Italy’s OLT LNG import terminal until the second quarter. The terminal last week purchased a December cargo from DufEnergy Trading via tender.

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