The steady slide in spot LNG prices below the $6/MMBtu level has brought several Asian buyers out of the woodwork even though the market is divided between expectations of further price declines and some bullish sentiment in the run-up to summer.
The S&P Global Platts JKM benchmark was assessed at $5.897/MMBtu on Feb. 25, the lowest level since Oct. 15, slipping below the $6/MMBtu level this week.
While some buyers are still on the sidelines hoping that prices will dip further, demand has emerged from restocking activity in South Korea, incremental gas-fired power demand in Japan following the earthquake, and deferred gas demand from India.
In China, February LNG cargo arrivals have slowed in comparison with Japan and South Korea, where heavy cargo arrivals could exceed January levels, and traders said prices might need to fall further for China’s purchases to pick up.
“Buying activity from northeast Asian end-users is slowly picking up post the Lunar New Year holidays, but overall cargo availability for April deliveries is sufficient,” a South Korean end-user said.
“There is buying interest, but bids are still lower than current spot levels,” a supplier from the Atlantic basin said, adding that buyers have not stepped up much since the US polar vortex in the week ended Feb. 20.
One buyer said there is not much support considering downstream natural gas prices in China, and trucked LNG prices could still fall by a few hundred yuan in a single day. Chinese trucked LNG prices were still around Yuan 3,000/mt in the week started Feb. 21.
Mixed demand
Market participants are caught between taking the plunge now or waiting for summer oversupply similar to 2020, when spot LNG prices dropped below $3/MMBtu. Early summer projections were bearish, but more bullish views have emerged.
Some recent buying interest included China’s Foran Energy, which issued a tender for April 1-7 delivery on Feb. 22, DES Zhuhai terminal. The tender, which closed on Feb. 23, was awarded in the low-$6/MMBtu, sources said…
