LNG: May 17-21: DES Northeast Asia market falls with supply/demand fundamentals slacked
--DES Northeast Asia
DES Northeast Asia prices fell 70cts from last Friday to $9.50-9.80 for first-half July delivery. Supply/demand fundamentals slackening turned sentiment bearish. Although production problems at the 16.30 mil mt/year North West Shelf (NWS) project and 3.70 mil mt/year Prelude project in Australia persisted, and a liquefaction train at the 23.80 mil mt/year Bontang project in Indonesia was said to be experiencing troubles, there were no moves to secure alternative cargoes and supply was not perceived to be tight. On the other hand, spot demand was retreating as prices were seen to be higher compared to long-term cargoes.
Demand was continuously sluggish in India. In fact, the destination of some cargoes was changed to South Korea. In addition to this, demand for fuel as well as natural gas also fell in India and Indian Oil Corp Ltd (IOC) lowered operation rates for a refinery to 84%. On the other hand, demand from Bangladesh and Pakistan emerged. Pakistan LNG (PLL) and Pakistan State Oil (PSO) were moving to purchase at least 14 cargoes for July to October delivery and two cargoes for July delivery through a tender respectively. State-run Petrobangla purchased a cargo at $10.1997 from AOT Trading via a tender.
Brazil's state-run Petrobras was believed to have secured seven cargoes for May loading in the end. Demand from the company would remain strong for the time being due to reduced hydropower generation amid ongoing low rainfall and reduction in natural gas supply from neighboring Bolivia via pipeline.