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Looming Australian Strikes Still Not Fazing Asian LNG Buyers

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August 30, 2023

(Bloomberg) —

North Asian liquefied natural gas buyers aren’t yet moving to prepare for potential supply disruptions caused by expected strikes in Australia.

China and Japan, who are major buyers of Australian gas, are sitting on sufficient inventories as they enter the period between summer and winter when demand is weaker, according to traders. There are also expectations that a deal with the unions will be reached before strikes significantly curb output.

Unions at two of Chevron Corp.’s LNG export plants in Australia threatened to stop work from Sept. 7 if a deal on pay and conditions isn’t agreed. Industrial action may not immediately affect production, but prolonged strikes increase the risk of disruption. The plants made up about 7% of global LNG output last year.

The threat to supply has rocked global gas markets this month, sending prices surging and then plummeting on every development. Traders — particularly those in Europe — feared that a disruption to exports will tighten global supply, prompting a bidding war between Asia and Europe for shipments of the power-station and heating fuel.

Those fears have yet to materialize amid lackluster spot buying interest across North Asia. Japan’s LNG inventories rose over the last week and are in line with the five-year average. China’s stockpiles at import terminals may hit 90% of storage capacity in the coming month, Qingneng Consultant said earlier in August.

North Asian buyers are expected to increase spot purchases if Chevron’s Gorgon and Wheatstone projects are forced to cancel or delay shipments under long-term contracts. However, it isn’t clear when or if LNG exports will be affected by the strikes. Chevron hasn’t made any changes to loading schedules, traders said.

Other spot market news:

  • Gail purchased a late-September cargo on a DES basis for India
  • The Darwin LNG project in Australia sold a cargo on a DES basis for Sept.-Oct. delivery to Asia
  • India’s Gujarat State Petroleum Corp. has decided not to buy a spot cargo for late September delivery
LNG stockpiles held by Japanese power generators increased 10.4% to 2.01 million tons on Aug. 27 from a week earlier, according to data released by the trade ministryStockpiles are back in line with the five-year averageEuropean gas storage was 93% full on Aug. 28 vs the 5-year seasonal norm of 80% for this time of yearEstimated gas flows to US LNG export terminals on Tuesday were at ~12.3 bcf/day, +2% w/w, according to BNEF

Buy tenders:

CompanyCargoesPortDeliveryOffers DueValid Until
PTT4 DES cargoesThailandOct.-Dec.Aug. 31 

Sell tenders:

CompanyCargoesPortDelivery/LoadingBids DueValid Until
Angola1 DES cargoAs far east as SE AsiaSept.-Oct.Aug. 30 
Vessel Rates:
Pacific spot earnings for a 160k cubic-meter vessel were $125,750/day on Tuesday, up $3,000 from the previous session, according to Spark Commodities, based on assessments from LNG ship brokersAtlantic spot earnings were $117,250/day, up $3,000 from the previous session: SparkNOTE: Spark values calculated on a round-trip basis, including hire, ballast bonus and lump sum estimates
Futures Prices:
Japan-Korea Marker futures for October delivery -0.5% $13.395/mmbtu on TuesdayNovember contract -1.1% to $15.125TTF futures for Sept. delivery -7.9% to the equivalent of $11.22/mmbtu on TuesdayOct. contract -7.8% to $12.133

© 2023 Bloomberg L.P.

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