Asian LNG Spot Price Dropped Back as China Buyers Faded out

According to SCI, the spot LNG CFR China price has dropped from USD 11.60/mn Btu on January 16 to USD 10.39/mn Btu on January 30. The price dropped by over USD 1.21/mn Btu in two weeks, indicating China buyers have already covered the rigid demand in Q1, 2018. Accordingly, the Asian spot LNG price slides at the end of January.

As for Japan, with snowfall in Tokyo and temperatures forecast below-average until mid-February, Tohoku Electric took a cargo unloading in March 18-22 for an estimated US$10.30/mn Btu. LNG supply to Japan was disrupted by a partial outage at Petronas’ Bintulu project in Malaysia, where Tohoku was an off-taker. Moreover, plunging temperatures in the South Korean capital Seoul could spark additional demand for spot LNG purchases from Kogas as heating needs spike at a time when 11 nuclear reactors are offline. Meanwhile, POCSO seeks a 2 – 5 March delivery cargo into Gwangyang. Besides, demand from India also seems healthy.

Sliding March spot prices tightened arbitrage opportunities for traders seeking to transfer LNG from Atlantic to Pacific markets with charter rates fetching about US$78 000 per day. Several reloads were offered from north-west European terminals to Asian buyers. Organizing a shipment within the next week would yield fatter margins as Asian spot prices in early March carry a US$0.70 /mn Btu premium to late March.