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Rising Asian LNG prices to help more U.S. loadings in November

Buyers of LNG from the United States are expected to cancel no more than five cargoes for November loading as winter demand in Asia has lifted prices, after dozens of cancellations earlier this year, several trade sources said.

Buyers usually have to notify some U.S. producers by the 20th of each month about cargo rejections for the month after the next one. It was not immediately clear if any cargoes have been cancelled for November.

Four sources said they expect a maximum of five cargoes to be cancelled, while three sources said they expect no cancellations at all.

This is in contrast to large-scale cancellations in previous months due to low demand and prices amid the coronavirus pandemic.

Up to 10 cargoes were likely cancelled for October loading, around 25 for September, 40 to 45 for July and August and around 20 for June.

Spot LNG prices in Asia have risen to multi-month highs in recent weeks supported by firmer demand and supply issues in Australia and the United States.

"Given the (price) spread, I believe no cargo is cancelled," one of the sources said.

Another trader said the price arbitrage works for U.S. cargoes to be loaded in November as demand from China was strong and Indian demand was likely rising too.

Consultancy Energy Aspects said in a report last week that in case of cold weather in northeast Asia in winter, spot purchases from buyers in Japan and South Korea could also increase.

Asian spot prices for November delivery are at around $4.80 per MM British thermal units (MMBtu), the highest since January.

The December price for S&P Global Platts Japan Korea Marker (JKM) LNG is over $5.00 per MMBtu.

In Europe, the November contract at the Dutch Title Transfer Facility (TTF) gas hub traded at around $4.50 per MMBtu on Monday.

"We expect that the demand boost from a cold start to winter across Northeast Asia would be enough to widen the JKM–TTF spreads for November and December contracts sufficiently for Northeast Asia to attract cargoes from U.S. export facilities," the report from Energy Aspects said.

(Reporting by Ekaterina Kravtsova in London and Jessica Jaganathan in Singapore Editing by Chris Reese)


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