LNG Asian spot prices fall as November cargoes offloaded
LONDON: Asian spot LNG prices fell this week as sellers struggled to offload the last of their November cargoes and Chinese demand for December supplies failed to materialise significantly after a frenzy of Asian buying last month.
November spot liquefied natural gas (LNG ) fell 50 cents to $10.50 per million British thermal units (mmBtu) though trades were sparse and the bidoffer spread was wide. December prices were cited as low as $10.50 although a trade was heard at around $11.10.
Crude, which was heading for a first weekly fall in over a month as part of a global market rout, also weighed on LNG as many contracts are linked to the oil index.
Spot Asian LNG spiked last month in anticipation of winter demand after a hot summer depleted stockpiles. China was seen as providing support to prices after the country got caught short last winter with its storage capacity still low.
However, that has not been the case so far this month.
“China has been pacing down supplies, so as not to spike prices again,” said one LNG trader. “Storage is a fact but I guess they are replacing volumes a little wiser than last winter.”
Another trader said a November cargo was bought by Osaka Gas for $10 per mmBtu although the Japanese utility had a wide delivery window and quality specification to make the sale attractive to suppliers.
“There’s some distressed sellers out there; the bid offer spread is wide,” said one LNG trader.
Turkey’s Botas closed a tender on Friday for 13 cargoes to be delivered in the first week of each month from November to February, according to several sources.
In the absence of a surge in demand, supplies were so far healthy going into the winter months, traders said. Japan’s Inpex said last week it had shipped its first condensate cargo from the mammoth Ichthys LNG project in Australia, which was seen as a prelude to LNG exports.
Russia’s Yamal facility in the Arctic pumped a record 2.4 million tonnes of LNG in September and operator Novatek said its third train would begin operations in December, some 6 months ahead of schedule.
Traders say Yamal’s restrictions lie more in the number of Arctic-class vessels available to ship the LNG than output. Two more Arc7 vessels, the Georgiy Brusilov and the Boris Davydov are now undergoing sea trials before joining Yamal, according to Refinitiv Eikon data.
The start-up of a number of export projects in the United States will also add to supply, with some still expecting the first cargoes from Cheniere Energy’s Sabine Pass 5 and Corpus Christi 1 to hit the spot markets this year.
Several traders mentioned the private tenders of multi-year strips from Corpus Christi 2, expected to begin operations next year, and Dominion Energy’s Cove Point.
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WINTER DEMAND: Spot Asian LNG spiked last month in anticipation of winter demand after a hot summer depleted stockpiles.