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

FEATURED COLUMNS

Editorial Comment
-Adrienne Blume
Global gas is facing a demand hit from the coronavirus pandemic and a structural oversupply in the LNG market following the startups of new LNG export projects in Australia and the U.S.
Industry Focus: Russia Accelerates Fight For Global Gas Export Market Share
-Eugene Gerden
Russia aims to ramp up its efforts to gain more gas export market share this year, despite an unfavorable business environment and growing pressure from major competitors.
Regional Focus: South Africa’s transport strategy to shape country’s gas sector
-Shem Oirere
South Africa’s Gas Utilization Master Plan outlines how the gas sector will be developed. As the country proceeds with the plan,


Best Practices in Supporting Front Line HPI Operations Remotely in Response to Covid-19

Register Now

To ensure employee safety, HPI companies had to quickly pivot to a remote support model with many subject matter experts (SMEs) and engineering staff working remotely supporting front line, sequestered critical operations and field operators.

What are the best practices and lessons learned from this new remote operational support model? What have been technologies and work processes that are enabling effective and efficient remote operational support? Is this the “new norm” going forward even when the impact of Covid-19 abates? If not, how will remote support of critical operations be changed?

If this topic and questions are of interest to you and your organization, please attend this special HPI webinar with a panel of leading industry customer experts who will discuss their perspectives. Attendees will have the opportunity to ask questions for the panelists.

May 18, 2020 10:00 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.
© 2020 Gulf Publishing Holdings LLC.