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Weekly Summary

LNG: Apr 1-5: Dull demand from Northeast Asia ex-Japan

--DES Northeast Asia

In the DES Northeast Asia market last week, front month delivery hovered around $9.10-9.40 once. The weak Netherlands' TTF market weighed on prices. Demand from buyers in Northeast Asia remained subdued, except for Japan.

The temperatures in Shanghai, China, where the maximum temperature rose to 25 degrees Celsius on Apr 1, were expected to hover around 15-20 degrees Celsius for a while. As a result, more players began to see that LNG demand from the country has been heading to decrease because heating demand could not be expected anymore this season. Moreover, price cuts of pipeline gas to around $9.00 by state-run companies in China would let end-users who have a right to use terminals prefer pipeline gas to LNG unless the price dipped below $9.00. "We may need to wait for the gas demand from China until summer" (a Japanese company).

Demand from Japan, on the other hand, was regarded as strong. JERA has been actively buying spot cargo since mid-Mar, as reported. Fresh information indicated that JERA appeared to have bought at least 10 cargoes. Moreover, they have been considering buying five cargoes for May-Jul delivery. As for the background of JERA's active procurement, a Japanese company explained, "Buying in the spot market is cheaper than asking sellers to exercise UQT (upward quantity tolerance) or provide additionally. Long-term contract prices, which are based on Brent, have shown an increasing trend due to strong crude prices derived from the tension in the Middle East and Ukraine."

 

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

The buying pace for imported LNG from buyers in India has been slowing down since March, and the Indian Gas Exchange (IGX) might explain a part of that. "Gas delivery through the IGX, a trading hub in India, can be an option for us, so importers have become cautious about spot procurement," said an end-user in India. The IGX, which started in 2020, increased trading volume in 2023 by 16% from a year earlier, enabling Indian end-users to procure LNG through the IGX. In the Middle East, he United Arab Emirates (UAE) was forecasted to restart importing LNG from April or May when temperatures would begin to rise.

 

--FOB Atlantic, DES Europe and South America

Netherlands's TTF market softened because consumption volumes for gas decreased as the peak demand winter season was over. Furthermore, temperatures in first-half April were expected to be higher than normal, according to weather forecasts.

 

Tokyo : LNG Team  Yamamoto   +81-3-3552-2411Copyright © RIM Intelligence Co. ALL RIGHTS RESERVED.