Global LNG glut forces India spot prices down

Vol 17, PW 18 (24 Apr 14) Midstream & Downstream

Spot LNG prices in India are likely to hit rock bottom for deliveries in the first half of June, on the back of falling demand in northeast Asian markets Japan, South Korea and China and a glut of LNG on the market.

Cargoes from Australia, Malaysia and Papua New Guinea and ‘re-loads’ from Spain are flooding the region making it a buyer’s market. Spot LNG prices in the first half of May could be around $14.35 to $14.75/mmbtu, dropping further later in the month to $14.20 to $14.60/mmbtu.

In the first half of June, prices should hit their lowest point this year at around $13.70 to $14.10/mmbtu. “These are rock bottom prices,” an Asian LNG trader tells us.

“Don’t expect prices to fall beyond this threshold.” Later in June prices should rise slightly by about $0.15 to $0.20/mmbtu.

Increased LNG supplies to the market are coming from Spain, which is sending out ‘re-loads’ as domestic demand flattens. Also supplying the market are Woodside Australia’s 16.3m t/y North West Shelf and 4.3m t/y Pluto LNG projects.

Last week Woodside offered cargoes to Tokyo Electric Power Company (TEPCO) and Kansai Electric Power Company (KEPCO), which might yet end up being offered to the market. On April 23, another tender to supply a large number of spot cargoes was floated by North West Shelf.