14 August 2015 | Simon Ellis, ICIS LNG Analyst
A healthy Pacific production outlook boosted by a first cargo from Indonesia’s Donggi Senoro LNG plant kept Asian LNG prices stable in the face of robust competition from Middle East buyers. The restart of Japan’s first nuclear reactor in two years also dampened sentiment.
The September EAX contract was assessed for the final time on Friday at $8.075/MMBtu, representing a fall of $0.125/MMBtu since it opened as the front-month on 16 July.
As the new front-month opened, sellers expressed hopes that strong demand from new entrants in the Middle East would extend the rally which began at the start of the month.
Demand from utility buyers in all four Asian markets was muted, with a wet summer in Japan stemming air-conditioning demand and promoting use of hydroelectric generation. Portfolio suppliers continued to exploit the premium of their crude-linked mid-term contracts over spot LNG levels to optimise deliveries into the region.
On 17 July, the highest bid in East Asia for H1 September delivery was recorded at $8.00/MMBtu, while the lowest offer into the region was $8.30/MMBtu.
Against a background of modest demand in East Asia, sellers continued to focus on a series of tenders from Egypt, Pakistan, Jordan and Argentina. Pakistan state buyer PSO and Jordanian power utility NEPCO both sought cargoes for September with Egyptian gas company EGAS seeking to close a tender for a second FSRU from October. Argentina’s ENARSA also awarded six tender cargoes for August and September delivery.
Asian buyers were shielded to an extent from price competition from the Middle East and the Atlantic Basin, by ample cargo availability in the Pacific region. Indonesia’s Donggi Senoro LNG plant, which will supply 2mtpa to Japanese and South Korean buyers on a long-term contractual basis, loaded its first cargo on 20 July. The facility was one of several new-build plants offering excess volumes into the spot market as Australia’s APLNG and GLNG plants were actively marketing volumes ahead of their anticipated September and October start-ups.
Further downside was provided in Asia as Japanese utility Kyushu Electric restarted its 890MW Sendai Number 1 reactor on 11 August, in a move anticipated to herald the phased return of a handful of the country’s nuclear reactors.
The availability of flexible cargoes in both basins effectively eroded any price differential between Middle East buyers paying premiums to British NBP and their Asian equivalents.
European buyers remained at a steady discount to Asian utilities around the $2.00/MMBtu over the period, spurring a total of seven conventional-size reloads from European terminals to premium markets from H2 July to H1 August.
ICIS is the world's largest petrochemical market information provider and has fast-growing energy and fertilizer divisions. Our aim is to give companies in global commodities markets a competitive advantage by delivering trusted pricing data, high-value news, analysis and independent consulting, enabling our customers to make better-informed trading and planning decisions. We have more than 30 years' experience in providing pricing information, news, analysis and consulting to buyers, sellers and analysts.
With a global staff of more than 800, ICIS has employees based in Houston, Washington, New York, London, Montpellier, Dusseldorf, Karlsruhe, Milan, Mumbai, Singapore, Guangzhou, Beijing, Shanghai, Yantai, Tokyo and Perth. Some 350 of ICIS’s staff are journalists engaged in reporting market prices and news, and ICIS is fully committed to upholding the highest journalistic principles of verification, corroboration and authentication. ICIS has a compliance framework that along with its methodologies and business processes adheres to the requirements of the IOSCO PRA Principles.
The ICIS EAX is a unique LNG price point, providing users with a daily tradable price for spot LNG delivered into East Asia. It is calculated using an arithmetic average of the delivered ex-ship (DES) front month and second month ahead assessments for Japan, South Korea, Taiwan and China.
This is the next generation in real-time, online tracking platform.
LNG Edge delivers information on LNG fleets, cargoes and prices – ALL in a single, user-friendly online platform.
It equips the whole trading team with unmatched transparency on shipping movements and availability, cargo and trade flow volumes, buy/sell opportunities, raw data and prices. It also provides user-friendly functionalities enabling faster chartering and trading decisions.
LNG Markets Daily
Global LNG Markets
ICIS publishes the most extensive list of global LNG spot price assessments (22 DES, 12 FOB, East Asia index), historical prices, charter rates and availability, together with daily news, market alerts and industry analysis.
Request a sample of our LNG reports
ICIS provides unparalleled pricing and market intelligence for China’s LNG/natural gas markets. Our reports coverage include LNG China import and domestic prices, supply-demand data, investment opportunities in China, local legislations and more.Enquire about our China LNG reports
ICIS provides a free online platform on small-mid scale LNG delivering key information on the developments in this emerging market:
• European value chain
• Marine and trucking segments
• Market news including archives
• Daily and forward price of various fuels
• Unit and price converter tool