--DES Northeast Asia

In the DES Northeast Asia market last week, prices fell. Front month delivery prices moved around $12.80-13.10. Prices fell on a sharp decline in the Netherlands' TTF market, which was triggered by a dive in the crude oil prices. Amid this, INPEX moved to procure cargo for early October delivery.

INPEX closed a buy tender on a DES basis at 10:30 Tokyo time on Sep 12. Through the tender, INPEX aimed to buy a cargo for Oct 13-15 delivery to the 5.50 mil mt/year Himeji terminal or the 11.90 mil mt/year Senboku terminal. Osaka Gas Co Ltd, which owns these terminals, usually takes long-term cargoes of 800,000mt from the Ichthys project in Australia on an FOB basis. Sources saw that INPEX conducted the tender in order to secure alternative supply. At the Ichthys project that INPEX was operating, production was unstable from mid-July.

For delivery to China, a sharp fall in the international market was expected to stimulate spot demand. At the moment, however, most buyers took a wait-and-see stance. In North China including Beijing, the lowest temperature during nights recorded 20 degrees Celsius in recent days, which caused power demand for air-conditioners to recede due to low temperatures.

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

As for the impact on the DES Middle East market by the Egypt's tender, Toby Copson, an LNG consultant, said, "While the Egypt tender has been short-term priced in a move, it is likely not to have a wider impact on supply/demand fundamentals, which are quite balanced as they stand, but will take some of the marginal supply out."

--FOB Atlantic, DES Europe and South America

The weak crude oil market would reduce import costs of LNG in Asian countries, where most of LNG are purchased with Brent-linked prices. As a result, "This drop has reduced the cost of LNG, enabling more spot cargoes to be diverted to Europe. This has alleviated some supply pressure in the European market" (James Whistler, Managing Director at Vanir Global Markets).