Page 14 - GLNG Week 20

GLNG ASIA GLNG
Spot prices show signs of recovery across Asia
PERFORMANCE
SPOT prices in Asia rose for a second consec- utive week last week, according to traders cited by Reuters on May 15. The recovery is still frag- ile, however, and has been bolstered in the short term by cancellations of cargoes from the US, as well as some regional production issues.
“US cargo cancellations is the main reason for prices to increase as supply for June is quite tight ... and a few portfolio companies are buy- ing cargoes to cover shorts,” a Singapore-based LNG trader was reported by the news service as saying.
Production curbs in Malaysia and Australia were also said by two traders to be contributing to tightening supply. Some cargo delays from at least one Australian LNG terminal owing to a technical issue were also mentioned by the same traders, though Reuters noted that it could not immediately confirm this.
The average LNG price for June delivery into northeast Asia rose to an estimated $2.40 per million British thermal units ($66.38 per 1,000 cubic metres), up by $0.40 on the previous week, according to the traders that the news service cited. Prices for July, meanwhile, were estimated to be roughly the same or slightly lower.
The rebound will come as a major relief after a difficult few weeks for the industry amid coro- navirus (COVID-19) lockdowns and a growing oversupply of LNG. Indeed, some may be hoping that the worst is behind them and any new wave of lockdowns would be easier to manage.
Japanese government data reported last week showed that spot prices for LNG in the country – the world’s biggest buyer of the super-chilled fuel – sunk to the lowest on record in April.
The Japanese Ministry of Economy, Trade and Industry (METI) said on May 14 that the average contract price for spot LNG cargoes shipped to Japan in April fell to $2.40 per mmBtu from $3.40 per mmBtu ($94.04 per 1,000 cubic metres) in March. As already mentioned, Asian spot prices fell even lower, to around $2.00 per mmBtu ($55.32 per 1,000 cubic metres) and are now climbing back up to $2.40 per mmBtu and above.
A number of countries, including in Asia, are now starting to ease lockdown restrictions, which is also helping to boost LNG demand and create additional supply tightness. However, new outbreaks, including in South Korea and China, mean that considerable concern remains over the potential for further waves of lockdowns and a resulting new hit to demand.
The situation remains highly unpredictable and at risk of deteriorating rapidly, but there nonetheless appears to be more confidence than before. This is helped by the fact that Chevron is due to be taking one train at its Gorgon LNG project in Australia offline from May 23 until July 11, adding to tightening supply, according to the traders cited by Reuters. Separately, mean- while, reports are now emerging suggesting that even more US LNG cargoes will not be loaded in July compared with June. (See: More US ship- ments reaching China even as other cargoes can- celled, page 9)
Combined, these outages and cargo can- cellations are giving the LNG industry some breathing space as countries assess how best to respond to the constantly evolving COVID-19 situation.™
The recovery is still fragile, however, and has been bolstered in the short term by cancellations of cargoes from the US.
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w w w . N E W S B A S E . c o m Week 20 22•May•2020