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Weekly Summary

LNG: Oct 11-15: DES Northeast Asia market surges with demand from Japanese end users

--DES Northeast Asia

 DES Northeast Asia prices surged $2.65 from last Friday to $38.65 for second-half November delivery. Amid strength in the Netherlands' TTF natural gas market, some end-users in Japan and China resumed spot purchase and sentiment turned bullish. Prices for second-half November delivery increased to mid-high $38's. In the middle of this week, JERA reportedly bought a spot cargo for November delivery. Some sources reckoned that since the 600MW No.8 unit at the Nakoso coal power plant jointly operated by JERA and Joban Power was shut down from mid-September, JERA was buying LNG to cover the power shortfall. Further, JERA apparently considered restarting the LNG-fired Anegasaki thermal power plant that had been shut down for a long time and might have purchased LNG for use at the power plant. Besides JERA, Tohoku Electric Power also seemed to contemplated buying November delivery. This was seen to be due to the shutdown of the No.8 unit at the Nakoso coal power plant as well.

 For delivery to Japan, similar to JERA, a number of power companies were buying LNG but some players were procuring fuel oil. In addition to LNG purchase, Tohoku Electric Power issued a buy tender for low sulfur fuel oil loading October to March 2022. Tohoku Electric Power apparently had the option to purchase 20000-80,000mt in the tender. Further, Shikoku Electric Power was moving to procure fuel oil with 1.6-2.0% sulfur for October to November delivery.


--FOB Middle East, DES South Asia, South east Asia and the Middle East

 Thailand's PTT reportedly purchased two cargoes at around $35.00 via a buy tender closed on Tuesday for one cargo each for delivery during Oct 18-24 and Oct 27-29 to the 11.50 mil mt/year Map Ta Phut terminal. The sellers were believed to be portfolio players. Further, PTT was said to be moving to buy two cargoes for November delivery via another tender. As the political situation in Myanmar had been unstable since February, natural gas supply from Myanmar to Thailand had fallen sharply. Because of this, PTT increase its import of LNG as a substitute for natural gas for power generation. In Thailand, although LNG demand for power generation would usually fall from November along with declining temperatures, demand was not expected to fall this year.


--FOB Atlantic, DES Europe and South America

 Brazilian state-owned Petrobras was receiving cargoes regularly. In October so far, Petrobras had received two cargoes each at the 6.00 mil mt/year Rio terminal and 3.80 mil mt/year Bahia terminal. Many of the cargoes were from the US such as the 22.50 mil mt/year Sabine Pass project and 13.50 mil mt/year Cameron project. In Brazil, rainfall had been decreasing year by year due to deforestation and agricultural land suffered severe droughts and desertification was progressing. This year as well, water shortage problems did not improve even with the arrival of the rainy season in October. Petrobras had no choice but to purchase LNG in order to raise the output of gas-fired thermal power plants to make up for low hydropower generation.


Tokyo : LNG Team  Yanagi   +81-3-3552-2411Copyright © RIM Intelligence Co. ALL RIGHTS RESERVED.