LNG Markets Analysis

Asia absorbs steady increase in LNG as NBP volatility rises

17 November  2016 | Ludovic Aldersley, ICIS LNG Analyst

 

Spot LNG prices in East Asia have inched higher over the last 30 days while European gas hubs have been more volatile.

The ICIS December East Asia Index (EAX) was assessed for the final time at $7.21/MMBtu on 15 November, having risen $0.36/MMBtu since becoming the front month on 17 October. The second front month contract, the January ‘17 EAX, closed at $7.33/MMbtu, representing a small $0.18/MMBtu rise.

A larger-than-expected round of purchases from South Korean incumbent, KOGAS set the tone in the second half of October. It purchased around 15 deliveries across December to February, up from only four that it had initially sought. Prices which were said to average around $7.00/MMBtu, appeared to be at a market discount for January but this was due to extra flexibility granted to sellers regarding discharge dates. Sellers were able to maintain East Asian offers in the mid $7.00s/MMBtu for outstanding demand until the end of October but had to abandon ideas of a $0.25/MMBtu contango between December and January as market attention turned to the second front month at the beginning of November.

GLobal LNG VS NW Europe LNG Assessment December'16

 

The prospect of greater production as plants in Australia and the US ramp up after a string of maintenance outages was cited as one factor keeping a lid on the contango. Another was the mild winter weather forecasts for Japan. On the other hand, traders also pointed to possible weather-driven demand in late December and January from the Beijing and northern China markets.

Taiwan too, has so far been more active this winter than in previous years. Though not a typical seasonal spot importer, lower-than-expected nuclear power generation, like in South Korea, encouraged its state-owned buyer to purchase a December delivery around $7.20/MMBtu at the beginning of November.

As the EAX across both front months narrowed into the low-mid $7.00s/MMBtu range, various discussions for incremental supply to India also helped support the EAX. Indian buyers transacted for spot December and January volumes at or close to EAX levels in early November.

Around this period, large tenders for supplies to Egypt and Pakistan over the mid-term forward curve consumed significant attention from traders. Opportunities for optimisation among traders for near-term deliveries to Egypt, India, Pakistan, and South Korea were also present however. One example from analytics platform, LNG Edge, being the churn involved in these two deliveries to India and South Korea.

Image showcases diversion of Nigeria-sourced cargo afer approaching Ain Sukhna, EgyptRe-exports, or diversions, from Europe appear still to have been in the money with the EAX Dec’16 holding a premium at or above $1.50/MMBtu to the Northwest Europe Index (NEX) for most of the period.

European gas hubs however, have been volatile with prices jumping, and then falling back, as winter supply profiles ease concerns over demand.

The front months on the British NBP jumped by around $0.50/MMBtu in early November, widening premiums to the Dutch TTF to about $0.60/MMBtu on 2 November.

The British premium over neighbouring Netherlands has been supported by a lack of available storage withdrawals over winter from the large-scale Rough site which has suffered extended outages in recent months.

There is currently only one Qatari cargo due to arrive in the UK over the coming weeks, according to ICIS LNG Edge. The platform shows as many as six Qatari vessels that usually deliver to the UK are either en route to, or from, East Asia.  

By Ludovic Aldersley

Request a sample of our LNG reports for these regional indices: EAX, SAX, MENAX, MDX, NEX, and IBX

About the Analyst


Ludovic Aldersley,
LNG Analyst, Global, ICIS
ludovic.aldersley@icis.com 

Ludovic Aldersley has been involved in energy for eight years, and in LNG specifically, for over five. After spending two years in the upstream commercial department of a large gas producer, he switched to cover LNG for the market intelligence and price reporting agency, ICIS, formerly known as Heren.

From reporter to deputy editor of the flagship LNG publication, he covered all aspects of the global LNG value chain, from long-term sales and purchase agreements (SPA) to the single-cargo delivered ex-ship (DES) and free on board (FOB) spot market. Within the value chain, his specialisation has been on LNG shipping and the charter market.

From investigative journalism to analyst, he has become responsible for the improvement and maintenance of an analytics platform that launched in 2015 which fuses together three core strengths within ICIS Energy.

Ludovic has led the development of a charter database at ICIS Energy and has been closely involved in expanding the range of LNG services ICIS provides: from a one-stop shop window of analytics, proprietary ship-tracking services, as well as a suite of small-scale LNG products for emerging markets.

He graduated with a Bachelor of Science Economics degree from the Universities of Bristol and Toulouse in 2007.

About ICIS

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.  

ICIS is a division of Reed Business Information, part of Reed Elsevier Plc.

 
STAY ON TOP OF LNG NEWS. FOLLOW US
 
 
 

ICIS East Asia Index (EAX) and Middle East North Africa Index (MENAX)

Unique LNG price points, providing users with daily tradable prices for spot LNG delivered into East Asia, and Middle East and North Africa respectively.

Find out more about ICIS Global LNG Markets Methodology.

LNG prices, news, analysis and real-time tracking

LNG Edge – real-time LNG tracking and analytics tool

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.  

Request a demo of ICIS LNG Edge

Daily and weekly reports

price reports

Report names:
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.

historical prices

Request a sample of our LNG reports

Expertise in the China LNG markets

Expertise in the China LNG markets

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

Small-mid scale LNG market intelligence

Small-scale LNG market intelligence

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

Register now to access the portal

 

Bearish European gas hubs keep re-load option open