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LNG spot prices rise as cold weather strikes, India buys

LONDON (Reuters) Asian spot LNG prices rose to highs not seen since November 2014 on strong demand as a cold snap stimulated consumption in China and India launched fresh purchase tenders.

Spot prices LNG-AS for February delivery steadied at $11.30 per MMBtu, 10 cents above Jan. 2 levels.

Heavy snowfall across parts of China curbed deliveries of LNG both by truck and by tanker into some import terminals, with temperatures also forecast to fall well below average in Tokyo, Seoul, Beijing and Shanghai from next week, according to data on the Reuters Eikon terminal.

As a result, demand for spot cargoes from Japan, South Korea and China was expected to remain firm, traders said.

Japanese utilities have been actively buying cargoes in recent weeks as cold weather sweeping the country has fuelled demand to replenish depleted stocks.

China, which surpassed South Korea as the world’s second-biggest LNG importer, continues to attract spot cargoes after rapid consumption growth in 2017, when imports rose by more than 48 percent.

Indian demand was particularly strong. Petronet and Gail both closed tenders this week to pick up supplies, though the outcome of the award could not be confirmed.

Bharat Petroleum also launched a tender seeking a cargo for the second half of February.

On the supply side, Indonesia’s Bontang plant was expected to award a tender to sell about 11 cargoes between February and December.

Output from two Australian projects, Wheatstone and Gorgon, improved markedly after conclusion of maintenance-related outages.

U.S. spot prices also hit record highs after snowstorms lashed the East Coast. Algonquin Citigate within-day prices hit $82.75 per MMBtu, Henry Hub was at $4.65 per mmBtu and Transco Z6 New York prices hit $140.25 per MMBtu.

The price of month-ahead gas on the Henry Hub, the country’s most liquid hub, were less influenced by the temporary blast of cold weather, trading at $2.795 per MMBtu.

Still, importers were looking to bring spot shipments into the under-used Everett terminal in Boston and Canaport terminal in Canada, which can be used to serve customers in the United States.

Pipeline limitations prevent those local markets from drawing in enough supply during times of peak demand, prompting a surge in prices for spot LNG sellers.

A cargo from Trinidad and Tobago aboard the Provalys tanker is currently unloading at Everett.

Editing by David Goodman


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FEATURED COLUMNS

Editorial comment
-Adrienne Blume
According to GIIGNL’s 2018 Annual Report, global LNG trade expanded by 3.5 Bft3d in 2018, to 38.2 Bft3d—a record 10% increase.
Power, LNG projects drive pipeline construction in Africa
-Shem Oirere
Increasing public investment in gas-fired power plants in Africa, the continuing recovery in global oil prices and persistent insecurity in key producer markets, such as Nigeria, are likely to impact gas transmission pipeline projects on the continent, even as more international companies express interest in the region’s stranded gas resources.


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