Asian LNG Prices Creep Higher on Japanese Demand

lng carrier natural gas
LNG carrier file image (c) Oleksandr Kalinichenko/shutterstock.com

reuters_logo1By Sarah McFarlane

LONDON, March 6 (Reuters) – Asian spot liquefied natural gas prices edged higher as scattered demand from Japanese buyers and others helped stem the recent decline in prices, traders said on Friday.

The price of spot LNG for April delivery inched up to $6.75 per million British thermal units (mmBtu) on Friday from $7.65 the previous week, while Europe’s benchmark UK gas hub prices slipped to trade at a discount.

“We’ve seen some end-user demand in Japan,” a trader said.

A ship broker also said there had been interest from Japanese buyers on a few cargoes coming up in Australia, along with “a little bit more interest” from China.

Top importer Japan took delivery of record volumes of LNG in January, while demand from other major importers Korea and China has disappointed.

Ample stocks and a mild winter, along with slowing economic growth, have dampened demand in parts of Asia.

“With the price development there’s really not been any huge rush to secure your needs, people have been quiet comfortable,” a trader said.

Earlier this week Asian spot LNG prices re-established a premium over rival European benchmarks, reversing a month-long trend, but modest price differences meant the recent pick up in shipments to Europe could continue.

Traders said European prices have been supported by the risk premium associated with the tensions between Russia and Ukraine, along with the lower production cap at Dutch gas field Groningen, although prices have eased this week.

“Spring is coming so I guess it’s normal to expect NBP (UK benchmark price) to come off a little bit,” a trader said.

Goldman Sachs forecast Asian LNG prices dipping to $6.25 per mBtu in the third quarter of 2015, before rising to $7.00 per mBtu in 2016.

LNG trade is set to exceed $120 billion in 2015, overtaking iron ore to become the second most valuable physical commodity after oil, the bank said in a commodities note.

On the supply side, Abu Dhabi’s ADGAS plans to shut down two of its liquefied natural gas (LNG) production plants from March 15 until April 19 for routine maintenance.

Qatargas has shut its Train 4 for planned maintenance and expects output to resume around March 25, raising the possibility of reduced deliveries from the world’s biggest LNG exporter. (Editing by David Evans)

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