Global LNG prices snap six-week streak of gains as Japan bows out

LONDON/SINGAPORE, Reuters—Asian spot LNG prices fell in the week to August 25, 2018, as buyers in Japan facing brimming stocks backed off from additional purchases, overlooking production setbacks in the US.

As Cheniere Energy took offline Train 3 at its Sabine Pass export facility, supplies to Korea Gas Corp.—the offtaker of volumes from the train—showed no sign of being impacted, traders said, confirming assurances from a Cheniere spokesperson.

Hurricane Harvey intensified into potentially the most powerful storm to hit the US mainland in more than a decade, set to make landfall on Friday or early Saturday at Corpus Christi and Houston, Texas.

Cheniere's Sabine Pass LNG plant is further up the coast, but a spokesperson said the hurricane had so far not impacted production.

Eurasian LNG price impacts. New supply from Algeria, Russia, Australia, Indonesia and Malaysia, coupled with Japanese utilities taking steps to swap out supply, snapped a six-week run of LNG price gains.

Spot prices LNG-AS for October delivery fell 25 cents to $6.05/MMBtu.

In Japan, Kyushu Electric took the unusual step of selling a cargo for early September and buying a shipment reloaded from South Korea for later that month, traders said.

Following a warmer-than-average July, Japanese utilities spent August replenishing stock levels at terminal storage tanks.

"Demand is poor and storage is high in Japan right now, and it looks as if these moves by Kyushu are an attempt to reshuffle supply," a source said.

Kyushu Electric is also an offtaker from Western Australia's Wheatstone LNG project, which is set to ship its first cargo in the first week of September.

 

 

Buyers' reticence may be reinforced by a desire to see prices fall as far as possible before importers must restock winter stores.

Algeria's state-run Sonatrach is looking to sell up to two LNG cargoes loading in mid-September, according to trade sources. The producer likely already sold one of the shipments, a trade source said, and is speculatively offering a second consignment loading around the same time.

"This summer it has become quite normal for Algeria to offer 2–3 cargoes for sale per month," he added.

Meanwhile, Russia's Sakhalin II plant launched a tender to sell one cargo loading at the end of October and another in early November.

ExxonMobil's tender to sell a September-delivery cargo from Australia's Gorgon project was to be awarded on Friday.

(Writing by Oleg Vukmanovic and Mark Tay)

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