--DES Northeast Asia

In the DES Northeast Asia market last week, front month delivery hovered around $8.20-8.50 once. Despite returns of Chinese and South Korean players from the Lunar New Year holiday, a persistent perception of oversupply sent front month delivery prices to the lowest level since April 2021.

Japanese energy utilities moved to resell cargoes one after another, accelerating oversupply in the market. Kyushu Electric Power Co seemed to have sold a cargo to be delivered to Northeast Asia on Apr 17-21 at a premium of 7-10cts to the April contract of DES Northeast Asia spot quotations via its tender that had closed week starting Feb 12. The awardee was unclear but the deal was apparently done last Thursday. A Japanese company commented, "Warm winter causes Kyushu Electric to have high inventories. Moreover, coupled with brisk output from solar power generation, the company struggles to digest LNG cargoes." On top of that, Kyushu Electric seemed to have spot availability for May and June delivery. The company was expected to issue sell tenders in the near future.

JERA was said to have sold an April delivery cargo at a premium of 7.5-8.0cts to DES Northeast Asia spot quotations. JERA had reportedly bought a cargo for April delivery in early February as operations at the 1,070MW No.5 unit of the Taketoyo coal-fired thermal power plant had been halted due to a fire, and output from the 700MW No.2 unit of the Hekinan coal-fired thermal power plant had decreased. A Japanese trader, however, pointed out, "In fact, the spot purchase was a part of JERA's optimizations and they rather have plentiful LNG cargoes on hand at the moment."

In China, domestic LNG prices by truck suddenly dropped to about Yuan 4,000/mt in recent days, making end-users take wait-and-see mood. Additionally, immediately after the Lunar New Year, gas demand for industrial use remained dull due to low operating rates at factories, which also moved domestic LNG prices by truck lower.

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

State-run Oman LNG floated a sell tender that closed on Feb 22 on a FOB basis. Through the tender, Oman LNG planned to sell a cargo loading from the 10.40 mil mt/year Oman project on Mar 30-Apr 1. A Japanese utility company said, "Oman LNG is not currently interested in selling cargoes to Europe, but rather more interested in selling cargoes to India and Northeast Asia." As reported, Oman LNG in mid-Feb contacted clients in DES Northeast Asia to ask for the purchase of three cargoes for late Apr and early May delivery. The Japanese utility company above appeared to be one of them. In India, Deepak Fertilisers, a fertilizer and petrochemical company, inked a long-term contract with Equinor in Norway. Deepak would procure 0.65 mil mt/year of LNG from Equinor for 15 years, starting 2026.

--FOB Atlantic, DES Europe and South America

Regarding DES South America quotations,"Price spread between DES Europe and DES South America is below $1.00 at this moment" (a Japanese company) was heard. Currently, cargoes loading from the Middle East are forced to take shipments via the Cape of Good Hope to go to Europe. As a result, cargoes from the Middle East are likely to inflow to the closer South America than Europe, narrowing the spread between both markets. In Guyana, South America, its president has recently unveiled an intention to invest in a natural gas pipeline and other infrastructure.