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March price eases but bitter cold arrests decline

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LNG Industry,

Reuters are reporting that Asian spot LNG prices eased further this week on expectations of reduced buying but plunging temperatures in Japan, South Korea and China prevented a steep price decline.

Spot prices for March LNG-AS delivery in Asia fell 20 cents to US$10.20 per mmBtu, according to LNG traders in Asia. This is the lowest price since 7 December, but 36% higher than the same period last year.

Cargoes for delivery in February are trading at close to US$12 per mmBtu, as spot demand from Japan remained firm.

Power companies in Japan have been snapping up spot cargoes over the past two weeks for delivery in February and early March, as flagging temperatures in northern Asia are set to dip further.

Japan’s imports of LNG rose to nearly 8.7 million t last month, up 8% from December and the largest volume since at least January, 2013.

Temperatures in Japan and South Korea look set to dip lower this week.

There was speculation by traders of potential spot LNG demand emerging from South Korea given the bitterly cold temperatures.

In China, gas shortages continue though traders have largely scaled back their spot purchases for the first quarter. Deliveries into China slipped to 4.9 million t in January, from the peak of about 5 million t in December.

South Korea’s POSCO bought a cargo for 2 – 5 March delivery into Gwangyang at a premium of about US$10.30 to US$10.50 per mmBtu.

This is similar to a cargo purchased by Japan’s Tohoku Electric for a second-half March cargo.

Australia’s APLNG sold a cargo for early February at a premium between US$11.80 and US$12 per mmBtu while India’s Gail may have bought a spot cargo for March at a premium of US$9.50 to US$10 per mmBtu.

Exports from Indonesia with around 345 million m3 loaded onto tankers in the week starting 29 January, compared with 591 million m3 in the previous week.

Some trade sources said Indonesia’s Bontang LNG export facility was experiencing feed gas issues. One off-taker said Pertamina informed them that output had been affected.

The handover of the Mahakam gas block from France’s Total to Pertamina on 1 January may have impacted supplies as Pertamina gets to grips with technical issues.

Still, prices could ease once exports start from the Cove Point LNG export project in Maryland.

Dominion Energy said on Thursday that Cove Point has started producing LNG at its natural gas liquefaction facility, which is undergoing commissioning and will start commercial service in early March.

Russia’s Sakhalin II project put eight cargoes up for sale between May 2018 and March 2019 with the tender closing on 9 February.

Angola LNG was also offering a cargo bilaterally most likely to one of the existing off-takers, which include Vitol, Glencore and RWE Supply & Trading.

Mexico’s CFE, which this week sought two February cargoes for its Atlantic coast Altamira terminal, was expected to seek more supply for its Manzanillo terminal on the Pacific in mid-to-late February for supplies in April – July.

In North Africa, Egypt purchased five cargoes for delivery in the second quarter through bilateral deals.

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