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Asian LNG prices edge higher as buyers return

Saturday, 10 August 2019 | 00:00

Asian spot prices for liquefied natural gas (LNG) edged up this week amid increased market activity driven by hot weather in parts of Japan, South Korea and China, with several buyers looking for cargoes.

Spot prices for delivery in northeast Asia in September are estimated at $4.20 per million British thermal units (mmBtu), up 10 cents from last week. Prices for October are estimated at around $4.75/mmBtu.

After some deals were done below $4.00/mmBtu last week for the first time in the past three to four years, this week’s deals were concluded largely slightly above $4.00/mmBtu, trade sources said.

DEMAND

China’s Guangzhou Gas has bought a cargo for August delivery from Glencore for over $4.00/mmBtu and India’s Reliance Industries bought a September cargo above $4/mmBtu.

Japan’s Tohoku Electric Power was seeking a cargo for delivery from late August to early September.

In the Atlantic, Colombia’s Calamari import project was seeking a small cargo for late August-early September delivery.

Some winter demand started to appear, with Turkey’s Botas closing a tender for four winter delivery cargoes.

Pakistan issued a tender for the supply of 10 liquefied natural gas (LNG) cargoes between the start of October and the end of December closing on Sept. 5.

In northeast Asia, winter demand is expected to emerge later, however.

“Weather forecasts for northeast Asia now suggest that much of the rest of August will be hotter than normal,” Energy Aspects said in its Global LNG Panorama report this week.

“While this is likely to lead to a bigger run on LNG stocks than if the weather was near average, particularly in Korea and Japan, any replacement buying is only likely to start showing up in late September or October,” the report added.

Some support to spot prices came from a jump in European prices late last week, an LNG trader said, adding that a deal was done at around $4.40-4.50/mmBtu on the price jump.

The rise in European prices was driven by short covering, however, with prices levelling off this week as European market is facing a full storage situation next month.

SUPPLY

LNG supply offers remained ample, keeping the global LNG market significantly oversupplied.

In the Atlantic basin, Angola LNG offered a late August-early September delivery cargo, while GAIL (India) offered three cargoes from its U.S. offtake for loading over October, November and December.

In Asia Pacific, projects in Papua New Guinea, Indonesia, Brunei and Australia were among those that issued sell tenders.

Australia is expected to maintain strong exports, a market source said.

A Chevron executive told investors last week its Australian facilities’ output was better than expected.

“Reliability is coming up, we have extra production over and above what we had planned and so all that production is going to be exposed to spot prices,” he said.
Source: Reuters (Reporting by Ekaterina Kravtsova, additional reporting by Sabina Zawadzki; editing by David Evans)

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