June 7, 2019 / 12:52 PM / a year ago

Global LNG: Asia falls to three-year low in thin volumes, August in focus

LONDON (Reuters) - Asian spot prices for liquefied natural gas (LNG) fell to a three-year low in thin trading as market players focused on deals for August, when demand is expected to pick up.

FILE PHOTO: An LNG tanker passes boats along the coast of Singapore February 3, 2017. Picture taken February 3, 2017. REUTERS/Gloystein Henning

Spot prices for July delivery to Northeast Asia are estimated to be $4.25 per million British thermal units (mmBtu), down from $4.50 last week.

That is the lowest since April 2016 when prices slumped to $4.00 per mmBtu, itself the lowest since Reuters began assessing prices in July 2010. The August price is assessed to be around 20-30 cents higher.

The lackluster market this week reflects a fall in the broader energy complex over fears of a global economic slowdown and the threat of a full-blown trade war between the United States, a top LNG exporter, and second largest buyer China.

Brent crude oil prices, against which many Asian LNG purchases are priced, have fallen almost 15% in the past three weeks, dipping to below $60 a barrel on Tuesday for the first time since mid-January.


The market remained well supplied with Australia’s Ichthys plant offering two LNG cargoes for June.

Indian buyers, a bright spot in Asian demand, continued to enter the market with Reliance Industries heard seeking three cargoes for delivery in July, September and October, according to sources.

Another source said Reliance bought a cargo for Aug. 10-15 at $4.45-$4.55 per mmBtu. India’s Essar Steel awarded three of their six-cargo tender for end-September, end-October and mid-November deliveries, two sources said.

A South China utility was heard in the market for a late-August and a September cargo.

A four-cargo tender from Indonesia’s Tangguh plant was heard awarded at Platts’ JKM plus up to 10 cents per mmBtu, a source said. The deliveries, one for each half month in August and September were awarded to DGI, Marubeni and Shell.

Pakistan also launched a huge tender for 240 cargoes spread across a 10-year delivery period, seeking offers by July 18.

In the Atlantic Basin, the Marvel Crane LNG tanker picked up a commissioning cargo from Sempra Energy’s Cameron LNG, the latest liquefaction facility in the U.S. to begin operations.

The tanker is now heading to North West Europe, according to shipping research group Kpler. A trading source said the cargo had been offered at a 10 cent discount to the NBP British month-ahead price.

Latin American buying continued, with Argentina’s IEASA seeking six cargoes for August into Escobar and Mexico’s CFE seeking one cargo into Manzanillo in July.

Platts got its first transparent bid into Europe with Trafigura bidding for a cargo for delivery into Barcelona at the end of July for $3.30 per mmBtu. The bid came on Thursday when Platts assessed the southern European LNG price at $3.556 per mmBtu.

Additional reporting by Sabina Zawadzki and Jessica Jaganathan; writing by Sabina Zawadzki; Editing by Kirsten Donovan

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