LNG: Oct 21-25: DES Northeast Asia market weakens with loose supply/demand

--DES Northeast Asia

DES Northeast Asia prices fell last week. A sense of ample supply was seen in the DES Northeast Asia market as sell tenders were conducted for cargoes from the 10.80mil mt/year Sakhalin 2 project in Russia and the 8.40mil mt/year Ichthys project in Australia. Although Korea Gas Corp (KOGAS) bought 15 cargoes to be delivered during Dec 2019 to Jan 2020, supply/demand fundamentals did not tighten as buying from the end-users in China and Japan was limited. As US-China trade conflicts weighed on China's economy, gas demand was generally sluggish. Therefore, no buying was seen from Chinese national companies.

--FOB Middle East, DES South Asia and the Middle East

FOB Middle East, DES South Asia and Middle East weakened last week. In India, inventories at the 17.50mil mt/year Dahej terminal were high, making it difficult for players to lease spare storage spaces. Under the circumstances, end-users were wary of buying spot cargoes. Meanwhile in the Middle East, LNG spot prices were becoming close to the domestic selling prices in Egypt. Therefore, Egyptian Natural Gas Holding Company (EGAS) was expected to resume spot sales of LNG. In addition, availability was seen from the 10.40mil mt/year Oman project and the 5.60mil mt/year Das Island project in Abu Dhabi. Therefore, supply/demand fundamentals loosened.

--FOB Atlantic, DES Europe and South America

The FOB Atlantic and DES Europe and South America markets fell last week. While availability was seen from the 22.50mil mt/year Sabine Pass project in the US and the 16.50mil mt/year Yamal project, Angola LNG was conducting sell tenders constantly. Therefore, ample availability was seen from Atlantic basin. Meanwhile, a sense of oversupply was seen in the market as no players moved to cover short positions and demand from South America and Europe was low. Some of the cargoes sold by Angola LNG and state-run Nigeria LNG (NLNG) were delivered to India.