Asian spot LNG prices fell to their lowest December levels since 2010, as a build-up of uncommitted cargoes in the Pacific negatively impacted the market, ICIS reports.
The continuing slump in the crude price, the authorisation of a first Japanese nuclear restart and the expectation of new plant start-ups extended the firm buyers' market conditions to the near curve.
The December East Asia Index (EAX) was last assessed on 21 November at US$11.094/million MBtu, marking a US$3.269/million MBtu fall since it opened on 16 October. January '15 EAX fell by US$3.725/million MBtu to US$11.263/million MBtu over the same period, reflecting further headwinds for sellers expected in the new year.
In the second half of October, sellers initially took confidence after Brent crude appeared to find support at the US$86.00/bbl level after the recent heavy sell-off. On 16 October, a December DES cargo from the latest PNG LNG cargo was heard to have closed above US$14.00/million MBtu, while a deal for the second half of January reportedly closed just below this level.
Demand from the usual winter sources remained soft as South Korea's KOGAS and most Japanese utilities reported they were unable to absorb further December cargoes. It was left to independent buyers in South Korea and China, as well as China's state oil companies, to provide some support to the market. As late as 21 October, the highest bid from an East Asian buyer was recorded at US$14.00/million MBtu.
Adapted from ICIS press release by Katie Woodward
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