Asian prices edge up from record low but demand still stale

SINGAPORE (Reuters) - Asian spot liquefied natural gas (LNG) prices edged up this week from record lows in the previous week as Chinese buyers re-entered the market, but stale demand elsewhere capped the rise in prices.

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 May delivery into northeast Asia rose by 10 cents to an estimated $2.40 per million British thermal units (mmBtu) this week, several traders said.

Prices for cargoes delivered in June are estimated to be around $2.50 per mmBtu, they added.

Four LNG tankers carrying U.S. LNG are on their way to China after Beijing started granting tax waivers to some importers, trade sources said.

This is the first time since March 2019 that shipments have resumed after a long-standing trade war in which China raised tariffs on LNG imports from the United States to 25% last year.

Beijing has started granting tax waivers to LNG importers, three China-based sources familiar with the matter said, though details on the companies that have received exemptions on the tariffs were not clear.

Two of the sources said the tariff has dropped to zero, though a separate value-added tax of about 10% still applies.

China’s Guangzhou Gas may have bought a cargo for delivery in June at about $2.40 per mmBtu, three traders said. This follows an earlier spot purchase by China’s ENN, they added.

“China’s demand is returning but whether it’s sustained will be the question, given demand everywhere else has dropped,” one of them said.

Four laden LNG tankers are floating on waters near the west coast of India, according to Clipperdata, adding that overall demand in India has reduced due to coronavirus driven lockdowns, which have hampered industrial demand.

Still, India’s Reliance Industries entered the spot market to seek a cargo for June delivery, said traders, though it was not immediately clear if the refiner has bought the cargo.

Supply was ample, however, with several LNG plants offering cargoes.

Indonesia’s Bontang LNG plant and Angola LNG offered cargoes for April to June period while Indonesia’s Pertamina offered a cargo for loading from Corpus Christi.

Brunei LNG sold two cargoes for delivery in May at about $2.40 to $2.60 per mmBtu, while Australia’s Ichthys LNG sold an April-loading cargo at similar price levels on a delivered basis, traders said.

Japan’s Hokkaido Electric bought a cargo for delivery in first half of June at about $2.50 to $2.60 per mmbtu, an industry source said.

Meanwhile, state-run Korea Gas Corp (KOGAS), South Korea’s top LNG buyer, has asked for some cargo deliveries to be deferred, citing high inventory levels due to the coronavirus outbreak reducing downstream demand, sources said.

Reporting by Jessica Jaganathan; Editing by Christian Schmollinger