Asian spot prices for liquefied natural gas (LNG) slumped this week to a six-month low, bucking the usual winter trend, as low demand persisted and supplies were boosted by deliveries from tankers that had been floating in north Asian waters for weeks.
Spot prices for January delivery dropped a dollar to $8.80 per million British thermal units (mmBtu), the lowest since May and below the levels of a year ago, for the first time in 2018.
Prices for February delivery, although also weaker, dropped less and returned to contango with the January. Prices were estimated at around $9.00 to $9.30 per mmBtu for February.
Low demand during the northern hemisphere winter and falling prices follow frantic buying by Asian utilities in September and October, filling up storage for the coming months.
Nevertheless, some traders bet on continued high demand and began using laden LNG carriers as storage in waters off Singapore, Malaysia and South China, while others had cargoes waiting there for delivery slots to become free.
When the market turned to backwardation last week, some of these traders sold the cargoes if only to gain from sky-high shipping rates by subleasing the newly freed-up tankers.
Despite the low demand, several cargoes were sold in both Pacific and Atlantic basins, according to trade sources.
U.S. producer ExxonMobil has sold a late December cargo from Australia’s Gorgon plant on a delivered ex-ship (DES) basis, a trader said. Australia Pacific LNG (APLNG) sold a DES cargo for January below $9 per mmBtu, a shipping source said.
Commodity trader Trafigura was marketing an early January cargo from Singapore this week, with one trader saying on Thursday the cargo was gone.
Kuwait Foreign Petroleum Exploration Company (Kufpec) is closing on Friday a tender for a free on board (FOB) cargo loading on Jan. 18-23 from Australia’s Wheatstone plant.
Japan’s utility Kansai Electric was one of the few buyers this week, securing a late January cargo, a trader said.
YAMAL SELLS TO EUROPE
Russia’s Novatek will sell the rest of its winter cargoes to Europe, having covered three positions in Asia — a way of cutting down on shipping costs from Europe to Asia, a source with knowledge of the matter said.
Novatek bought cargoes for December at a $1.60 premium to the Dutch gas hub benchmark price, a January cargo at a slight discount to the spot Asian LNG price and February cargo linked to Brent crude, the source said.
Novatek is trying to sell two summer cargoes to Asia, with prices expected to be linked to oil, according to the source.
In the Atlantic, Nigeria LNG sold an FOB cargo for December loading from its Bonny plant, after offering at least two at the end of November, several sources said.
In the Middle East, Gunvor won an FOB tender from Abu Dhabi’s state-owned ADNOC for loading between Dec. 26 and 28.