ICIS Reports that Asian LNG Prices Surge Amid Fierce Winter Competition
LONDON, November 26, 2013 /PRNewswire/ –
Buyers in all four East Asian markets have competed aggressively to secure winter
cargoes, putting pressure on limited flexible supplies and driving prices to monthly
The ICIS EAX
December assessment closed on 15
November at $18.525/MMBtu, having climbed $1.425/MMBtu since it opened as the front-month
contract on 16 October. Friday’s close also represented the highest EAX
assessment recorded for December, and
stood $4.685/MMBtu above the equivalent contract price on the same date in 2012. January
was assessed at $18.778/MMBtu on 15 November, which also marked the highest level for the
month recorded by ICIS
As the period opened, buyers were motivated to secure cargoes early after the previous
winter, which had seen prices spike dramatically in March and April after a subdued start
to the season.
On 17 October, the highest bid for H1 December was recorded at $16.60/MMBtu, with the
lowest offer heard at $17.20/MMBtu for the same period. However, broad-based demand soon
applied upward pressure on prices and a handful of December deals were concluded early in
the period into Japan in the $17.10-17.30/MMBtu range.
South Korea’s KOGAS was reported to have a requirement for 50 winter cargoes after
nuclear outages spurred Korean demand for other sources of generation. Petrochina also
tendered for the first four of an expected 10-15 cargo winter requirement to cover
seasonal and commissioning requirements. China’s CNOOC, Taiwan’s CPC and several Japanese
electricity utilities were also understood to be looking for two or more December cargoes.
On the supply side, both Qatari consortia were said to be unable to supply spot
cargoes before January because of incremental cargo sales, the ramping up of new-term
contracts and a three to four week maintenance outage at RasGas train 7. By 24 October,
buyers set their highest bids at $17.50/MMBtu for H1 and H2 December. A Japanese utility
was understood to have paid $17.70/MMBtu for a prompt cargo secured by a Japanese trader
at the Angola LNG tender.
Potential sellers were also faced with rising costs due to weak production at Egypt,
Nigeria and Trinidad’s Atlantic LNG plant – which scheduled a six-day maintenance outage
at its fourth train in early November.
Faced with limited options, traders turned to European reloads as the marginal source
of supply, tapping the Zeebrugge, Sines, Montoir and Gate terminals for volumes in October
Spain remained the focus with a further five conventional-sized cargoes reloaded in
‘s new Spain reload assessment launched
on 1 November at $14.00/MMBtu, but climbed to $14.75/MMBtu by 15 November as wide
arbitrage spreads to peak markets persisted.
Cost pressures appeared unlikely to ease for East Asian buyers into the later winter
months. By 13 November, the highest bid into Japan for H1 January stood at $18.50/MMBtu,
with the lowest offer at $18.70/MMBtu.
Several market sources said that with LNG prices now in line with crude oil parity,
Asian utilities may opt to switch away from spot LNG
to crude and petroleum products.
There was little immediate sign of this trend on the curve, which remained firmly in
contango. On Friday, H1 December was assessed at $18.500/MMBtu, H2 December at
$18.550/MMBtu, H1 January at $18.650/MMBtu, H2 January at $18.905/MMBtu and H1 February at
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