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Thursday, 21 January 21
LNG MARKET RIDING HIGH, BUT WILL THE GAINS CONTINUE? - DREWRY
The LNG market started 2021 on a high note with Asian spot prices crossing $30 per MMBtu while LNG shipping rates recorded a high $350k per day due to freezing temperatures and tight vessel supply. However, the current market conditions are poles apart from the supply-demand fundamentals with the market slated to be in super-backwardation.
Since October 2020, LNG prices have risen 300% to average $18.57 per MMBtu in January 2021 as some spot deals for end-January and early February have already been concluded in the range of $20-30 per MMBtu. The spur in Asian spot LNG prices has been so strong that it has surpassed the growth in Bitcoin value, highlighting just how ‘hot’ LNG has become as a commodity.
There are several factors that have contributed to the meteoric rise. First and foremost is lower-than-usual temperatures across Europe and Asia. While the former has tapped into its storage inventories with daily withdrawal rates reaching new highs, the latter has been taken by surprise with most of the countries ill-prepared to meet higher LNG demand for heating.
Second, the push from coal to gas in the power generation sector has further increased LNG demand in Asia, particularly in China and Japan. In China, landed LNG prices at terminals were recorded at $33 per MMBtu while prices for trucked LNG supplies have risen much higher. The government has further capped LNG usage in industrial and energy sectors with high gas shortages looming large. In Japan, the country’s inability to restore its nuclear power generation units after the Fukushima disaster a decade ago has increased its reliance on LNG for power generation. The Japanese government has encouraged voluntary cuts in power consumption with power prices reaching ¥250 per KWh (or $700 per MMBtu).
Both countries are scouring for LNG cargoes and are being forced to pay higher amounts. Some Japanese LNG buyers were also reported to be sucking LNG carriers empty instead of leaving behind the usual 5-10% to maintain tank temperature. The sky-high spot LNG prices have also forced other Asian countries such as India, Pakistan and Bangladesh to defer spot cargo procurement, raising worries of looming gas shortages in the countries. Furthermore, the surge in Asian LNG appetite has caused a diversion of Europe-bound cargoes to Asia and those from Russia to Asia through the Northern Sea even in icy January.
On the supply front, production issues in Australia, Qatar, Norway and the US coupled with lower production levels in other LNG exporting countries due to COVID-19 has squeezed the market to an extent in 2020. US LNG exports have risen since, with record exports in November and December. The current market is favouring US LNG exports to Asia with an extensive US-Asia price arbitrage. Henry Hub gas prices have been relatively stable at $2.70 per MMBtu while average Asian LNG spot prices were $18.57 per MMBtu. This translates to a netback of around $60-70 million, as a US LNG cargo bought at around $10 million is sold in Asia for $60-80 million.
In this respect it is worth noting that Nigeria LNG’s LNG Abalamabie is on its way to load from the US Freeport LNG terminal. The vessel is on the most expensive voyage after being chartered by BP for $350k per day and is expected to deliver cargo to Europe relieving a lower chartered vessel for an Asian delivery .
What lies ahead?
Cold temperatures are likely to extend to February and March keeping LNG demand high in Asia. However, congestion at the Panama Canal congestion is easing with more vessels moving from the US to Asia transiting through the Suez Canal. Meanwhile, LNG supply is expected to grow with Australia’s Prelude FLNG and Egypt’s Damietta LNG restarting in 1Q21
Therefore, Asian LNG prices are set to fall in 2Q21, but will be higher year on year supported by a boost in LNG imports from Asian countries which had deferred spot supplies due to an increase in prices. Also, European storage will be depleted by the end of winter, triggering many LNG cargoes moving towards the region.
The rise in LNG prices is beginning to stabilise with Asian spot futures for March deliveries at $9.47 per MMBtu. Over the summer, we expect LNG spot prices to average between $5 per MMBtu and $6 per MMBtu. The US-Asia spread will narrow in the coming months curtailing US LNG exports to the region and triggering cargo cancellations, albeit at a much lower level than the estimated 180 cargoes cancelled during the summer of 2020.
Meanwhile, LNG vessel supply will ease with 63 LNG carriers scheduled to be delivered in 2021 of which 31 are planned for 1Q21. Shipowners are trying to advance their vessel deliveries to take advantage of the ‘hot market’ with Flex LNG advancing the delivery of two of its vessels. Sinokor Merchant is also re-activating three of its laid-up steam turbine carriers for the spot market.
In a broader perspective, the current cold snap is expected to bring life to long-term contracting of LNG supply as countries will look to improve their preparedness for winter in addition to meet the higher LNG demand due to decarbonisation activities. This will also spur LNG project developers looking to reach FID in 2021-22. We believe the Panama Canal congestion will be less severe in 2021, but will worsen with rising US LNG exports which will choke the passage in the coming years. Therefore, LNG projects on the US West Coast, Mexico and Canada have an advantage over their East Coast counterparts as they would bypass the Panama Canal for shipping cargoes to Asia.
However, the major question is whether LNG prices will touch the same highs in the next winter season. The early outlook is negative, as we expect buyers to be better prepared for the next winter with a likely rise in floating cargoes. Nevertheless, LNG demand will grow at a faster pace, tightening the availability of LNG carriers next winter and thus raising shipping rates close to current levels. Prepare to see more long-term chartered newbuild orders in 2021.
Source: Drewry
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Wednesday, 13 January 21
COAL TO BE BIGGEST CONTRIBUTOR TO INDIA'S $5 TRILLION ECONOMY: AMIT SHAH - BUSINESS STANDARD
The Centre on Monday awarded the letter of allocation to successful bidders of coal mines under the commercial auction held during October-November ...
Monday, 11 January 21
MUTED COAL RECOVERY IN 2021 - BALTIC EXCHANGE
Coal demand is expected to rebound in 2021
Medium-term outlook is less favourable although demand declines are expected to be subtle ...
Sunday, 10 January 21
KOREAN GENCOS INVITED BIDS FOR TOTAL 880,000 TONS OF COAL FOR MARCH 2021 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), on behalf of EWP, KOSPO, KOSEP and KOWEPO issued an international tender for total 880 ...
Friday, 08 January 21
INDIA COULD COMPETE AGAINST CHINA IN SOLAR MODULE PRODUCTION WITH THE RIGHT GOVERNMENT SUPPORT - IEEFA
The focus should be on helping manufacturers become globally competitive
Although one of the top 10 solar module producers in the world, India ...
Thursday, 07 January 21
FITCH FORECASTS DOUBLING IN ASIAN WIND, SOLAR CAPACITY BY 2029, TOPPING 1,500GW
Despite some near-term delays due to the Covid-19 pandemic, solar power and offshore wind will drive steep growth in non-hydro renewables in Asia, ...
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- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Australian Coal Association
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Planning Commission, India
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Parliament of New Zealand
- MS Steel International - UAE
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
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