Asian spot prices for May slip as N-reactors restart

SINGAPORE / Reuters

Asian spot liquefied natural gas (LNG) prices fell this week as demand eased in North Asia on expectations for higher temperatures in the region and as nuclear reactors restart in Japan, limiting the need for gas for power generation.
Spot prices for May delivery slipped to around $7.70 per million British thermal units (mmBtu), said several trade sources surveyed by Reuters. That is the lowest since the week of September 22.
Japan’s power utility Tohoku Electric Power Co Inc bought a cargo for delivery in May at between $7.75 to $7.85 per mmBtu, which is lower than the $8.30 to $8.40 per mmBtu it paid for a cargo for April delivery, two traders said.
Japanese LNG trading giant JERA bought a cargo for May though price details were not immediately available, said three traders that participate in the market. It last bought an April cargo for about $8.30 to $8.50 per mmBtu.
“It’s getting warmer in Japan and LNG demand is going down as a result…it’s not as cold as last week and with nuclear reactors restarting, there is no urgency to buy spot,” said a Japan-based LNG trader.
Japan’s Kansai Electric Power restarted the No. 3 reactor at the Ohi nuclear plant earlier this week while Kyushu Electric Power’s No. 3 reactor at the Genkai nuclear plant is expected to restart next week after maintenance.
Still, Asian spot prices were higher than the same period last year buoyed by less supply from Papua New Guinea after a powerful earthquake in late February knocked out ExxonMobil’s export facility.
While Japan’s Osaka Gas, one of the four long-term buyers from the project, has said it has so far not bought any LNG to replace supplies from the shutdown, Japanese term buyers have been making enquiries in the spot market for cargoes to be delivered in March and April, traders said.
Demand for LNG from South Korea could increase as the country moves to shut coal-fired generators to control air pollution at the same time as nuclear reactors going into scheduled maintenance.
In India, demand was also robust with Gail (India) seeking two cargoes for delivery over April to May and Bharat Petroleum Corp Ltd seeking a cargo for mid-April. BPCL’s tender likely attracted a lowest offer of about $8.30 to $8.60 per mmBtu, said two traders that participate in the market.
Still, with new supply coming onstream, downside risks to spot prices remain. Golar LNG has started production at its floating LNG (FLNG) platform in Cameroon, with the first cargo to be exported in early April.