--DES Northeast Asia

In the DES Northeast Asia market last week, front month delivery prices moved around $11.80-12.10. Under a lack of clear determinants, with firm demand from India offsetting slow demand from Japan and China, prices moved sideways. Amid this, a buyout of the US Tellurian by Woodside, a major natural resource developer in Australia, attracted attention in the market.

Spot procurement from Japanese end-users were inactive, because they had already built up their inventories in preparation for growing demand for summer. A trader said, "We see Japanese companies have already secured enough supply." Spot demand for LNG from China has remained weak because of ample pipeline gas supply with cheap prices. On talks for delivery to China, there were still bids in the market. Nevertheless, these bid levels were only at discount levels to DES Northeast Asia spot quotations. A Japanese company said, "Spot inquiries are not so strong."

The strategy of Woodside, which acquired US LNG firm Tellurian, has attracted attention in the market. "Considering the global business operations, they need 'LNG made in the US' that allows them to supply to Europe" (an Asian producer). Moreover, unlike Australian LNG, US LNG does not have a risk of early depletion of the gas.

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

India state-run GAIL issued a buy tender for a cargo to be delivered to the 17.50 mil mt/year Dahej terminal in early September. The tender would close on Jul 29. With the contango that first-half October delivery prices were above September delivery prices in the DES Northeast Asia market, buyers apparently saw merit to procure spot cargoes at an early stage. Additionally, Indian end-users needed to procure LNG cargoes more actively than before as Modi's government was trying to expand social infrastructure such as city gas and electricity.

--FOB Atlantic, DES Europe and South America

Continuing natural gas supply from Russian Gazprom to Europe worked negatively for prices. In the wake of the order by the International Arbitration Court, German Uniper has been asking for compensation from Gazprom, causing a possibility that the payment of natural gas by OMV, a major natural resource company in Austria, to Gazprom would be forced to transfer to Uniper as compensation. Russian gas supply might be stopped if OMV cannot pay Gazprom's bill. However, "As the 20th of the month payment deadline passes, Gazprom nominations into Europe remain at normal rate" (James Whistler, managing director at Vanir Global Markets).