05-09-2018

Platts JKM for LNG cargoes delivered in Oct dips amid emerging autumn softness

The Platts JKM for LNG cargoes to be delivered in October was assessed at $11.75/MMBtu, dipping 4.35 cents/MMBtu from last Friday, as the market took a breather after recent gains, and autumn shoulder month weakness started to emerge.

Sources said the market may be peaking with oil-slope equivalent levels at seasonal highs of around 15%, and end-users held back to re-evaluate future prices.

“Clearly, not a lot of bids, and offer levels don’t signal market strength, seeing lack of interest,” a Singapore-based trader said.

Trade activity was thin, with no firm bids or offers submitted during the Platts Market on Close assessment process.

Others, however, added that expectations for further demand for winter cargoes continued to underpin the firmness in the market.

“The market may still be supported, steady at relatively the same level, but when end-users start buying for winter again, it will undoubtedly go up,” another Singapore-based trader said.

Demand from end-users appeared limited except for one South Korean buyer, who was heard to be sounding out the market for winter volume, although it was not clear how firm their requirements were. In addition, an Australian producer was heard possibly seeking one November and one December delivery but details remain unclear.

Attention would be focused on ExxonMobil’s sell tender, offering a DES September 11-October 2 cargo from Gorgon. The tender was heard to have closed Monday at 3 pm Singapore time.

Inpex issued a buy tender for two cargoes delivering into Japan. Cargoes are sought to be delivered November 27-December 3 and December 24 -30. The tender closes on September 10 with validity on the day after.

On other tender news, Colombia was heard to have issued a tender last Friday, seeking a 100,000 cu m cargo for October 3-7 delivery, and the volume will be split with three different downstream buyers, according to sources. The tender was expected to close September 11, with next day validity.

In India, GSPC was heard to have issued a tender for H2 October, seeking a commissioning cargo for their new receiving terminal in Mundra. The tender was expected to close September 17, with bids valid until September 19.

End-users out of India were also heard to be in the market looking for two cargoes to be delivered in Q1 2019, according to a source.

Over in Europe, an end-user out of Spain was heard bidding for a cargo to be delivered in mid-October at TTF + $1/MMBtu, according to a source.

However, LNG demand out of Spain continues to see bidding competition out of the Middle East as non-endusers continued to seek for product to cover shorts. A European trader reported an offer for a single cargo DES Kuwait to be delivered in mid-October in the high $11s/MMBtu.

Market participants were struggling to find cargoes to profit off the spread between JKM and European gas hub prices.

“There is not enough LNG to take away. The spread is open but there is not enough LNG that can be reloaded at decent levels. The fact that it is that prices can still go up – there is a lack of gas in the Far East and Europe,” said a European trader.

The UK’s NBP hub price continued to rise on the back of a few small outages to the UK gas grid in the morning. The start of the trading session saw high liquidity which drove up the ICE NBP October futures contract by more than 2.5% and also added significant uncertainty further down the curve.

Market participants pegged fair value for reloads out of Northwest Europe at around a $1.50/MMBtu premium to the equivalent TTF price.

Also in the Atlantic, Turkey’s BOTAS was heard to be in discussion with several entities to supply cargoes from November 2018 to March 2019.

Meanwhile, Brazil’s Petrobras was heard to be bidding above $11/MMBtu for an October cargo, according to a source.

In LNG Shipping, Unipec was heard to have expressed interest to charter a vessel over the winter, delivering mid-October.

The Seri Bakti was heard to have been fixed by Gunvor on a multi-month basis until March 2019, delivering promptly.

Source: Platts

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