May 15, 2020 / 9:24 AM / 14 days ago

Asia price rises for second straight week as supply tightens

SINGAPORE (Reuters) - Asian spot liquefied natural gas (LNG) prices rose for a second straight week as supply of the super-chilled fuel tightened, trade sources said, pointing to fewer cargoes arriving from the United States and some regional production issues.

FILE PHOTO: A liquefied natural gas (LNG) tanker is tugged towards a thermal power station in Futtsu, east of Tokyo, Japan November 13, 2017. REUTERS/Issei Kato/File Photo

The average LNG price for June delivery into northeast Asia rose to an estimated $2.40 per million British thermal units (mmBtu), up 40 cents from the previous week, traders said.

Prices for July are estimated to be about the same or slightly lower, they said.

“U.S. cargo cancellations is the main reason for prices to increase as supply for June is quite tight... and a few portfolio companies are buying cargoes to cover shorts,” a Singapore-based LNG trader said.

Production curbs in Malaysia and Australia are also causing supply tightness, two traders said, adding that there are some cargo delays from at least one Australian LNG plant due to a technical issue. Reuters could not immediately confirm this.

Chevron is due to shut one of its trains at its Gorgon LNG export plant from May 23 to July 11, which is adding to the supply tightness, traders said.

A recovery in demand, as coronavirus restrictions are gradually lifted and businesses return to work, is also pushing up prices, they said.

South Korea’s GS Energy bought a cargo for June delivery at about $2.60-$2.70 per mmBtu, and Chinese utility Guangdong Energy group, previously known as Guangdong Yudean Group, bought a cargo for July delivery at about $2.40 per mmBtu.

China’s Foran Energy Group bought a cargo for June delivery at $2.60 per mmBtu, while Thailand’s PTT bought a cargo for late June at about $2.30 to $2.50 per mmBtu, traders said.

Brunei LNG may have sold an early July cargo at about $2.50 to $2.60, one said.

India’s Gujarat State Petroleum Corp (GSPC) is seeking five LNG cargoes for July to December, while Japan’s Tohoku Electric may have bought a cargo for late June delivery into Japan at $2.40 per mmBtu, traders said.

On the sell side, Angola LNG has offered a cargo for late May loading and Novatek may have offered a cargo for loading from Yamal in the second half of July, they added.

Several cargoes were also still floating on waters, signalling that demand recovery is slow, one of them said.

Reporting by Jessica Jaganathan: Editing by Neil Fullick

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