LNG prices sink again as coronavirus disrupts demand

Asian spot prices for liquefied natural gas (LNG) sank this week as the coronavirus pandemic further dampened demand, prompting buyers to push back cargo deliveries. The average LNG price for June delivery into northeast Asia LNG-AS was estimated at around $2.30 per MMBtu on Friday (April 17), $0.20 per MMBtu lower than the estimate last week. The current price is almost half that for June a year ago, Reuters data showed.

 LNG and gas stocks had already been high all over the world, a trader said. “Coronavirus has made the bad much worse. The market is down due to low offtake by usual buyers,” he added. Several buyers around the world are trying to defer cargo deliveries, industry sources said, which has led to several floating cargoes and prompted some sellers to offer unwanted volumes in tenders. “That’s why there are so many sell tenders on the market,” the LNG trader said. In a tender this week, Australia’s Ichthys LNG plant sold a cargo for loading in early May below $2/MMBtu on a free-on-board (FOB) basis, sources said. Brunei’s LNG export plant sold an early June cargo at $2.30/MMBtu on a FOB basis and also separately sold a cargo on a delivered ex-ship (DES) basis for May 8-9 at around $2.10 per MMBtu. There was an offer from Indonesia’s Tangguh LNG plant this week for five cargoes for the May to July period. Indonesian exporter Pertamina also offered two June cargoes. 

In an unusual move, Royal Dutch Shell RDSa.L issued a five-year strip tender offering four cargoes a year from 2021 onwards with an option to extend for another five years. On the S&P Global Platts Market on Close window on Friday, commodity trader Gunvor bought an early-June cargo from Vitol at $2.05/mmBtu, but other bids and offers in the window were higher. There were also some buyers on the market looking to purchase volumes as the LNG prices are at historical lows. Turkish state energy company Botas was seeking seven cargoes for delivery over May to June. Kuwait Petroleum Corp (KPC) was looking to buy a cargo for delivery in May. German energy company EnBW EBKG.DE was seeking four cargoes for delivery in northwest Europe in the third quarter of this year. In China, Shenzhen Energy issued a tender for a June cargo. A trader said there were signs of “going back to normal” in China, adding that some demand might return in India after the lockdown in the country was eased in some areas next week. But he added that, so far, some Indian’s buyers were still trying to defer cargoes. Japanese buyers might also try to defer cargoes, three sources said, but this could not be immediately confirmed.