Global LNG-Asian Prices Stay Near Record Highs Amid Tight Supply, Cold Spell

 

Cargo prices for March delivery were around $20.50 per million British thermal units (mmBtu).

 

Cold weather in Japan has forced many utilities to draw from stockpiles, and as a result they are stepping up purchases to prepare for peak summer demand, a trader said.

 

Japanese buyers wanting to avoid high winter prices had repeatedly deferred making purchases, hoping that weaker demand would bring down import costs.

 

"We are seeing more Japanese utilities stepping into the market," a Japanese trader said.

 

"It is still very cold in Japan, today it's even snowing in Tokyo. But milder temperatures are coming and demand will begin to come down," he said.

 

Tight supply is expected to last until at least the second half of the year.

 

"Supply is generally tight and that is the issue more than anything else at the moment," a Singapore-based LNG trader said, adding he expects prices to stay well above $20 per mmBtu for the time being.

 

"There are just very few cargoes facing a growing number of buyers," he said.

 

Still, tight global supply could be partly offset by cargoes due to be re-exported from Spanish terminals over the coming weeks.

 

Also, continued uncertainty about the restart of nuclear reactors in Japan is prompting buyers to secure supplies for later in the year, the Japanese trader said.

 

Japan's LNG imports rose to a record last year, as utilities burned more of the fuel to compensate for nuclear capacity that was shut following the 2011 Fukushima disaster.

 

Some utilities are eyeing restarts of nuclear plants later this year or in early 2015, but Japan's new independent nuclear regulator has stepped up safety requirements.

 

On the supply side, Italian utility Enel may have sold cargoes of Nigerian origin in a tender to Petronas, BG Group and Glencore, the Singapore-based trader said.

 

Brazil's Petroleo Brasileiro SA, or Petrobras, is set to receive an LNG cargo from Norway, Reuters shipping data showed.

 

The Arctic Princess tanker with a capacity of 147,835 cubic meters left Statoil's Hammerfest LNG terminal between Jan. 28 and Feb. 1 and is destined to arrive at an unspecified port in Brazil on Feb. 15, the data showed.

 

The scope of a planned May-June shutdown at the plant processing gas from the Snoehvit field in the Norwegian Arctic is still uncertain, co-owner GDF Suez said on Thursday.

 

The maintenance at Europe's only LNG plant is expected to reduce output by 6 million cubic meters per day from May 2 until June 8, Statoil said earlier this month. 

Source: Reuters