SINGAPORE: Spot prices for Asian liquefied natural gas (LNG) climbed towards $10 per million British thermal units (mmBtu) this week, spurred firm demand from China and gas plant maintenance denting supply.
Spot prices for July LNG-AS delivery in Asia were at $9.80 per million British thermal units (Btu) this week, up 20 cents from the previous week. Prices for August delivery will likely trade closer to $10 per mmBtu, two traders said.
But the continued spike in prices – currently at a four-year seasonal high – could attract more arbitrage supply from Europe to enter Asia, which could cap gains, they added.
“It’s not a frenzy like it was earlier this week but (prices) are still quite high,” a Singapore-based trader said.
Higher-than-normal temperatures across Asia are also expected to boost LNG prices, data on Thomson Reuters Eikon shows.
Maintenance and lower exports from several plants are also supporting spot prices, traders said.
Malaysia’s Bintulu LNG export plant is experiencing a sharp drop in shipments amid a logjam of vessels stuck outside port, potentially due to technical issues affecting the plant or fields. Feedgas volumes into Sabine Pass fell by a third to 2 billion cubic feet/day on May 15 and have remained there ever since, reflecting an outage at the plant’s liquefaction train, traders said.
The APLNG plant on Curtis Island off the east coast of Australia will also undergo a partial maintenance over July, August and September, affecting half of a train.
TENDERS AND TRADES
Oil major Chevron may have sold an additional spot cargo to a portfolio player at close to $10 per mmBtu, while Russia’s Sakhalin Energy likely sold a late-July loading LNG cargo at about $9.80 to $9.90 per mmBtu, traders said.
The Papua New Guinea export plant sold a July loading cargo this week, but price details were not immediately available. Indian Oil Corp also issued a tender seeking a cargo for August delivery into Dahej terminal, the traders added.
Still, with Chevron completing planned modifications on Gorgon Train 2 in the Gorgon LNG plant off Western Australia, which had been idled since May, more spot supply could cap prices, traders said.
Production from the second train of Chevron’s second Australian LNG mega-project at Wheatstone in Australia is expected to start this month, which could also add to the spot market, they added.
