More spot LNG expected in India as prices soften

Vol 17, PW 17 (10 Apr 14) Midstream & Downstream
     

Spot LNG prices are likely to soften by up to $2/mmbtu for Indian buyers as early as this month (April) following a sharp drop in purchases by China, Japan and South Korea.

“Spot demand was very high, especially from China because of the severe winter,” says a Singapore-based LNG analyst. “Buyers can expect prices to soften.

” In India the result of high spot LNG prices was high ‘burner tip’ prices for customers, used to paying $18 to $24/mmbtu since January. “Demand in north-east Asia is weakening and spot prices are falling,” adds GAIL.

In northeast Asia spot prices have fallen from a high of $20 earlier this year to between $17.70 and $18.20/mmbtu. An additional slump is expected as suppliers release cargoes ‘hoarded’ since the beginning of the supply squeeze in early 2014.

“Most of these cargoes are expected to come to India,” predicts Petronet-LNG. Buyers can also expect a rise in unwanted European cargoes arriving on Indian shores as ‘re-loads’ because Europe no longer needs to maintain winter reserves.

GAIL received a Spanish ‘re-load’ from Excelerate aboard LNG tanker Explorer on April 2 at Dahej. GAIL is scouting for good deals from Spain, Belgium and other European markets.

Spot purchases are likely to rise in India as affordability increases. “I see a lot of activity if spot prices hover between $13 to $15/mmbtu,” we hear.