18 August 2018, London — Asian liquefied natural gas (LNG) spot prices edged higher this week as attention shifted to cargoes for winter storage, though few shipments changed hands.
LNG cargo prices for delivery in October LNG-AS were about $11.10 per million British thermal units (Btu), up from $11 last week. September cargoes were still being sold, with prices assessed at $10.20 to $10.30 per mmBtu, up 20-30 cents.
A prolonged heatwave through large areas of China and in Japan over the past month has kept prices above three-year highs, where they have been since April.
A harsh winter in 2017-2018, compounded by soaring Chinese demand, sparked that long rally and the start of buying for this winter’s storage could maintain that trend.
Multiple traders said that South Korean state-run utility Kogas, the world’s second-largest single corporate buyer of LNG, waded into the market and bought a large number of cargoes after holding talks with sellers this month.
Two sources said Kogas had wanted to buy 12 cargoes for October to February or March. One source said the company bought 20 cargos for the fourth quarter alone, though another said the purchases were for fewer shipments.
Japan’s Tohuku Gas was heard by several traders buying an October cargo for $11.10 per mmBtu, with other Japanese interest also seen in the market. Some traders expect Japan’s LNG imports to rise this month and next to above last year’s levels.
One trader said that few Chinese buyers were seen this week, having previously bought large volumes, and there could be future bottlenecks at some ports.
Compared with Japan and Korea, the world’s number one and three LNG buyers, Chinese capacity for storage is relatively low, which also leaves it vulnerable during winter demand spikes.
Mexico’s state-run utility CFE awarded two cargoes to Trafigura and two to Cheniere, several traders said. One said that Cheniere was awarded more cargoes and another said that Shell was also awarded shipments as part of a ten-cargo tender.
Cheniere, meanwhile, received approval from U.S. regulators feed gas to its new LNG terminal in Corpus Christi, marking the start of commissioning at the Texas facility and raising the prospect of a commissioning cargo coming to market soon.
Indonesia’s state-owned Pertamina is offering one cargo a month for delivery in October, November and December in a tender closing on Aug. 20 and valid through to Sept. 20.
There were two Angola tenders this week, one cargo each, for delivery to Japan, Korea, Taiwan or China (JKTC) in the second half of September. Kuwait Foreign Petroleum Exploration Company (KUFPEC) offered a cargo for a Sept. 14-25 loading at Wheatstone.