By April 19, 2016 Read More →

Global LNG: Prices steady on piecemeal demand

Japan LNG imports expected to fall in 2016


One analyst says LNG is “probably the weakest commodity of all for the next five or six years” Shell photo.

By Sarah McFarlane

LONDON, April 15 (Reuters) – Asian spot prices for liquefied natural gas (LNG) steadied this week on patchy demand as traders gathered in Australia for the LNG 18 conference.

LNG for June delivery in Asia traded at about $4 per million British thermal units (mmBtu), in line with the previous week.

Traders said there was scattered buying interest from importers including South Korea, Japan and India, helping to support the nearby price.

The market structure remained in backwardation, however, with traders saying that prices for July were lower than those for June, indicating a bearish outlook as more supply comes online.

India’s Gujarat State Petroleum Corp (GSPC) tendered to purchase 12 LNG cargoes for delivery in 2016/17.

South Korea’s Komipo was looking for a single LNG cargo for June delivery, one trader said.

Japan’s Nippon Steel was in the market for a couple of cargoes in the summer, a second trader said.

Bob Takai, chief executive of Sumitomo Corporation Global Research Co, said that top importer Japan’s 2016 LNG shipments are expected to fall to between 81 million tonnes and 82 million tonnes, from 85 million tonnes in 2015 and a record 88.5 million tonnes in 2014.

“I think this declining trend is intact,” Takai said, adding that LNG is “probably the weakest commodity of all for the next five or six years”.

Takai said this was based on a weakening demand outlook from leading importers and a glut of supply.

Traders had an eye on oil prices that that have been particularly volatile ahead of the weekend meeting of major oil exporters in Doha, Qatar, to discuss a possible output freeze to to address the global supply glut.

Brent crude futures were down 2.5 percent at $42.75 by 1538 GMT.

On the supply side, Angola LNG is expected to tender to export two commissioning cargoes in the first half of May, before the export terminal pauses for maintenance and then ramps up production in summer, a trader said.

The plant’s LNG exports stalled after a rupture on the flare line forced a shutdown in April 2014.

BP will supply Indonesian power utility Perusahaan Listrik Negara (PLN) with LNG until 2033 under a contract it signed on Friday.

The British company will supply PLN with 20 cargoes a year from its Tangguh project in West Papua province from 2017 to 2019 and 44 cargoes a year from 2020 to 2033. (Editing by David Goodman)

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