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High spot price for LNG this time of the year
Spot prices for LNG in Asia rose this week (August 1-8) to their highest for this time of the year since 2013, as buyers prepare for more extreme temperatures amid a supply crunch. The average LNG price for September delivery into Northeast Asia LNG-AS is now estimated at about $16.90 per MMBtu, up $1.30 from the previous week according to industry sources.
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Besides buyers already securing demand ahead of winter, temperatures in China and Japan have been soaring, increasing demand for air-conditioning, and consequently higher demand for electricity/LNG. Even though prices do usually peak during summer and winter months on account of extreme weather but it also falls in between. The prices have not fallen this year.
According to “LNG Global” industry sources, Beijing Gas bought one cargo to be delivered between Sept. 26-30 into the Yuedong terminal at a price well above $15 per MMBtu. China’s Shenzhen Energy bought a cargo for Aug. 19-27 delivery to the same terminal at $16.20 per MMBtu. PetroChina sold a cargo for delivery into the Fujian terminal in China over Sept. 4-8 at $16.14 per MMBtu during the S&P Global Platts’ pricing process on Thursday.
The United States continued record exports to make up for the supply disruptions elsewhere.
The long term contracts are looking much more encouraging today even with crude prices hovering around $72 per barrel. The Henry Hub linked contracts are also looking good though high shipping costs can be killing. In this scenario, swapping USA supply contracts with European countries appears to be an attractive proposition for both Europe as well as India (GAIL).
Well, some exciting times ahead for the LNG industry, especially for GAIL who is well endowed with US contracts
