--DES Northeast Asia

In the DES Northeast Asia market last week, front month delivery hovered around $8.50-8.80. After prices hit the lowest level since April 2021 in the beginning of the week, Chinese buyers rushed to procure cargoes, receding oversupply in the market. Rather a Chinese end-user said, "We can feel even perceptions of supply tightness."

The buyers that actively purchased DES China spot cargoes in recent days were mainly independent energy companies including Foran Energy, according to a Chinese end-user. These companies had slots at LNG import terminals owned by state-run PipeChina. The end-user stated, "If they have enough tank ullage to take LNG cargoes, it is better for them to buy spot cargoes now since the price is currently reasonable." Last March when the market had fallen, Chinese buyers had also imported LNG cargoes into storage facilities of PipeChina so that they could avoid paying penalty fees for unused cases.

In the spot market, no firm offers were reported for first-half April delivery. For second-half April delivery, China International United Petroleum & Chemicals Co (UNIPEC), British Shell and Chinese independent energy company ENN had cargoes on hand but these sellers took a bullish stance. Only offers were heard at a premium of 20-35cts to the April contract of DES Northeast Asia spot quotations.

On talks for long-term cargoes, Korea Gas Corp (KOGAS) and Woodside agreed with the long-term contract on a DES basis for 10 years and six months from 2026. The contractual volume was 500,000mt per year. Woodside was expected to supply LNG cargoes from its portfolio including the Scahborough gas field, where the development was undergone, to KOGAS. KOGAS had inked another long-term contract with state-run Oman LNG in late February. A Japanese company stated, "KOGAS seems not to renew the long-term contract with state-run QatarEnergy and has apparently decided to sign with Woodside instead."

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

Indian state-run Petronet bought cargoes for Apr 16-20 delivery at $7.70-7.80 and for May 18-25 delivery at $7.80-7.95 via tender that closed on Feb 26. In response to the outcome, another Indian buyer said, "The prices in the $7's are cheaper compared with long-term contract prices. Provided such cheap prices are offered, we will continue to buy." In Kuwait, the Middle East, the daily highest temperature was moving about 25 degrees Celsius and was forecasted to reach 30 degrees in second-half March. A Japanese company said, "As temperatures are rising similar to previous years, more buyers will emerge in the Middle East."

--FOB Atlantic, DES Europe and South America

Weak natural gas prices in the US might lead producers to cut their production levels further. The US Chesapeake Energy announced production adjustments in 2024. Natural gas futures prices on the New York Mercantile Exchange (NYMEX) were in the $1.6's, the lowest since Jun 2020 once. "Other gas producers were in tough conditions, and we will see more production cuts," mentioned a portfolio player.