LNG: Nov 13-17: Japanese utilities sell cargoes
In the DES Northeast Asia market, with an expectation that spot demand would increase ahead of winter, discussion levels for first-half January delivery rose to about $16.80. Nevertheless, as some Japanese energy utilities were moving to resell January delivery cargoes, the magnitude of the gain was limited. Details such as the buyer and price were unknown, Kansai Electric Power Co was said to have sold a cargo for January delivery at a discount level to the January contract of DES Northeast Asia spot quotations. JERA also seemed to have interested to sell January delivery. These Japanese power companies apparently had high inventories for LNG and were trying to resell excess cargoes in the spot market. A European trader said, "Spot demand from Japan depends on how cold it will be going forward but at the moment, it will unlikely become harsh."
The Panama Canal Authority was stepwise lessening the number of vessels that passed through the canal in a day from 35-37, the daily average, from November due to low water levels along with the small amount of rainfall. At present, impacts on LNG supply to Northeast Asia were not observed but some sources were concerned about collapse of supply/demand balance in the future. An energy utility in Japan taking term cargoes from the US on a DES basis stated, "Sellers basically ensure supply volumes but in case sellers declare force majeure, the situation will suddenly turn to be uncertain. As our supply/demand is balanced at the moment, if force majeure comes out from sellers, it will become unbalanced and it will be late for us to take any measures against the force majeure from now."
Meanwhile, new spot demand emerged from South Korea. Major steel manufacturer Pohang Iron and Steel Company (POSCO) was looking for 10 cargoes in total for 2024-2025 lifting via its buy tender closed on Nov 9. Through the tender, the company was seeking two cargoes each for Jan-Mar, Apr-Jun, Jul-Sep and Oct-Dec 2024 delivery as well as two cargoes for 2025 delivery.
--FOB Middle East, DES South Asia and the Middle East
At the 10.40 mil mt/year Oman project, LNG production had been apparently disrupted. Although state-run Oman LNG released no information about the specific cause for the trouble, production facilities returned to normal in a short period and operations already restarted. Therefore, there were no impacts on delivery, according to sources. In India, state-run GAIL resumed buying cargoes for 2025 delivery. The company issued a swap tender to buy cargoes for delivery to India and sell cargoes for loading from the US. The tender would close on Nov 29.
--FOB Atlantic, DES Europe and South America
The 15.00 mil mt/year US Freeport project, which experienced supply disruption early this week owing to the outage, has been heading to restore production level rapidly. The volume of feed gas supply to the project, which fell to the level around 0.1 bcm per day on Monday, has recovered to the usual level of around 2 bcm per day at this moment. However, some market participants concerned the supply disruption might be repeated since the project experienced a fire accident last June and a supply disruption in September this year as well. In Latin America, the Dominican Republic's import volume has decreased.