Gas Processing & LNG is Produced by Gulf Publishing Holdings LLC

Worst winter likely for LNG as Asian prices to stay at seasonal low

Liquefied natural gas (LNG) spot prices in Asia have dropped to seasonal lows and could remain weak on expectations of a mild winter depressing demand for gas for heating, trade sources and analysts said.

A slowdown in China’s coal-to-gas switch amid a weaker economy is also curbing purchases and weighing on prices, traders said.

Spot LNG prices are currently at their lowest for this time of the year in a decade since Reuters first started publishing the price. LNG-AS

“Milder winter weather is forecast across northeast Asia. Although long-range forecasts are highly uncertain, the prospect of milder weather and weaker demand is weighing on market sentiment,” said James Taverner, director at research and consultancy firm IHS Markit.

In Japan, electricity prices fell to a six-month low last week as temperatures held above average for this time of the year, while clear skies after a wet October increased solar supplies.Japan, the world’s largest LNG importer, is expected to have warmer-than-usual weather through January 2020, the weather bureau said in late October.

Imports of the super-chilled fuel into Japan had already dropped by 3% in October from the previous month, the first time since 2014 that shipments fell in October, Refinitiv shiptracking data showed.

“There haven’t been that many import tenders from Japan, so that’s a sign that their demand is not so high,” a Singapore-based trader said.

In China, the world’s second biggest LNG importer, temperatures are up to 3 degrees Celsius higher than normal in some regions, according to the Ministry of Emergency Management.

The warmer weather combined with a weaker Chinese economy could also weigh on spot prices, traders said.

The potential slowdown in demand is expected to further dent earnings of gas producers, some of whom have reported lower quarterly revenues due to subdued energy prices.

Still, there could be some upside in demand from South Korea where the government is planning to temporarily stop power generation from up to one quarter of the coal-fired power fleet from December to February, and up to half in March, next year, which could support LNG consumption, Taverner of IHS Markit said.

The global LNG supply glut due to new projects coming on stream this year could hit prices during summer next year, he added.

“Fundamentals point to summer 2020 spot prices potentially dropping even lower than experienced in 2019,” Taverner said.

Reporting by Jessica Jaganathan; Editing by Muralikumar Anantharaman

Copyright © 2019. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

                                  CMEGroup                                     Icelogo


Editorial Comment
-Adrienne Blume
The continued expansion of natural gas trade is led primarily by growth in the LNG sector, which has tripled over the past 3 yr.
Industry Focus: The future of gas-to-power projects in Africa
-Shem Oirere
Natural gas is expected to play a central role in supporting Africa’s drive to achieve electricity connection for nearly 600 MM people without access to the grid, to reduce widespread reliance on coal for power generation, and to fast-track the continent’s slowed industrial expansion.
Regional Focus: Gazprom faces challenges for combined LNG/processing plant in Baltics
-Eugene Gerden
Russia’s largest natural gas producer, Gazprom, aims to build a giant project on the Russian Baltic seaport of Ust-Luga. The plans include the construction of a combined LNG and gas processing plant.

GasPro 2.0: A Webcast Symposium

Register Now

Following on the heels of the highly successful GasPro 2.0 Webcast Symposium in October 2018, the second GasPro Webcast Symposium 2.0 will take place on October 24, 2019.

The 2019 web event will gather experts in the fields of LNG, gas processing, and gas transport/distribution to share their operations expertise, engineering and design solutions, and technology advances and trends with our audience.

Attendees will learn about technology and operational solutions and deployments in a number of areas: plant design and expansion, construction, NGL production, optimization, sulfur removal, marine operations and separation technology.

October 24, 2019 08:30 AM CDT

Register Now


Please read our Term and Conditions, Cookies Policy, and Privacy Policy before using the site. All material subject to strictly enforced copyright laws.
© 2019 Gulf Publishing Holdings LLC.