PACIFIC LNG: Key market indicators for Sep 9-13

JKM prices fell 5.3% week on week Sept. 6, prompting price-sensitive buyers to secure near-term cargoes. Active procurement in Asia, along with Egyptian General Petroleum Corp.'s tender, absorbed surplus cargoes and closed the East-West arbitrage, supporting prices.

Platts, part of S&P Global Commodity Insights, assessed the October JKM price at $13.465/MMBtu Sept. 6, down by 75.5 cents/MMBtu from the previous week. At the same time, the last Platts-assessed DES Northwest Europe price for October was at $11.642/MMBtu Sept. 6, a decrease of 94.1 cents/MMBtu on the week.

Northeast, Southeast Asia

Chinese buyers have been responsive to the recent drop in JKM prices, with at least two securing October shipments at around $12.8-$13/MMBtu in the previous week.

The lower prices have also drawn interest from South Korean importers looking to replenish their stocks, with three buyers securing multiple shipments for October and November over the past week.

Japanese end-users were heard seeking cargoes, with at least one buyer closing a tender for an October shipment.

The market expects production issues at Bintulu, Malaysia and Ichthys, Australia to be resumed only in October.

Platts assessed the Southeast Asia Marker at $13.175/MMBtu on Sept. 6, a decrease of 83.8 cents/MMBtu on the week.

Traders noted LNG demand in the region remains subdued in September because of low power requirements amid floods and the monsoon season. Vietnam and the Philippines were impacted by infrastructure damage and power outages in the week ended Sept. 6 because of Typhoon Yagi.

The Philippines' First Gen issued a buy tender last week for a cargo to be delivered mid-October, while a Thai importer was also heard seeking a cargo for late October to early November. Market participants anticipate increased activity from Southeast Asian buyers in the spot market after October, when the monsoon season ends.

India

Platts assessed the West India Marker at $12.95/MMBtu Sept. 6, down 73.8 cents/MMBtu on the week.

Indian buying interest emerged with Bharat Petroleum Corporation Ltd., Indian Oil Corporation Ltd. and state-owned GAIL Ltd. securing multiple cargoes for September and October shipments in the week ended Sept. 6.

Market participants in India view the fall in crude oil prices as an impediment to gas demand, as end-users may consider switching to alternative fuels such as propane, fuel oil and naphtha.

The JKM/WIM spread was assessed at 52.5 cents/MMBtu Sept. 6.

Derivatives

The East-West Arbitrage remained closed, limiting additional supply to Asia for October and November. The Platts LNG arbitrage between North Asia (via the Cape of Good Hope) and the Northwest Europe region was assessed in the negative territory throughout the week ended Sept. 6, indicating traders would gain higher margins by pulling a US-sourced cargo to Northwest Europe.

Despite an increasing number of floating cargoes in the Atlantic basin, this narrow spread has limited the incentive for cross-basin trade flow.