LNG: Feb 3-7: Market falls with demand from China plunging
--DES Northeast Asia
The DES Northeast Asia market plunged last week. Demand from China fell sharply and supply/demand fundamentals in the DES Northeast Asia market were loose. Despite supply problems at the Bintulu project in Malaysia and the Prelude project in Australia, this did not cause supply/demand to tighten and stop the market from falling. China National Offshore Oil Corporation (CNOOC) seemed to have officially declared force majeure on Feb 5 on the intake of LNG. As of Feb 4, CNOOC had informed its term suppliers such as Royal Dutch Shell and France's Total from which it was buying large quantities of term cargoes that it might declare force majeure. With the new coronavirus spreading, production was seen to be low and gas demand was expected to decline considerably. Further, PetroChina was expected to declare force majeure in the near future.
--FOB Middle East, DES South Asia and the Middle East
FOB Middle East, DES South Asia and Middle East market sharply declined. Cargoes for February delivery were still available and sellers rushed to sell by lowering their offers for prompt cargoes. This exerted downward pressure on prices for first-half March delivery. Buying interest was seen from Indian players but supply surpassed the demand. In India, Essar Steel conducted a buy tender for 36 cargoes for delivery in 2021-2023. Gujarat State Petroleum Corporation (GSPC) intended to buy a total seven cargoes for delivery in April to October via a tender. But GSPC postponed the closing date of its buy tender from Feb 3 to Feb 10 as the market was on a downtrend.
--FOB Atlantic, DES Europe and South America
The FOB Atlantic, DES Europe and South America markets slipped. Although buy tenders from Greece and Turkey were conducted this week, availability from the Atlantic and Middle East was ample and supply/demand fundamentals were loose.Greek gas company DEPA closed a buy tender on Feb 5 for one cargo each for March, April and May delivery. Meanwhile, Botas in Turkey closed a buy tender on Feb 6 for one cargo each for arrival on Mar 10-11, Mar 15-16, Mar 22-23 and Mar 26-27.