The Platts Japan Korea Marker for May delivery trended down 45 cents/MMBtu over the Asian trading week, closing at $14.95/MMBtu Friday, as supply for the month began to outweigh demand.
Sellers were forced to reduce May offers from the high $15s/MMBtu, seen at the start of the week, to the low-$15s/MMBtu by Thursday, in a bid to stimulate some demand. However, Asian buyers' bids for May remained stubbornly in the high $14s/MMBtu, creating a lull in trading activity.
A deal around $15/MMBtu was reportedly concluded to a Japanese electricity producer for late May delivery towards the end of the week, but this could not be confirmed at the time of press.
Mild weather over end-March and early April meant that buyers were under no pressure to purchase cargoes for May delivery, with some even anticipating that they may be able to push June requirements into July.
A total of four to five buyers from Japan, South Korea, Taiwan and China were seen back in the market for prompt May arrival cargoes, trying to take advantage of softening sentiment, but none were particularly firm and could afford to wait for lower priced volumes below the $15/MMBtu mark, sources said.
Sellers appeared equally firm in their resolve to transact around $15/MMBtu however, particularly for reloaded volumes which were priced around $14/MMBtu FOB, supported by optimization among portfolio sellers looking to employ their own vessels and onshore May gas prices of around $11.00/MMBtu in Spain.
At such levels, the arbitrage for FOB cargoes into Asia was closed, as the addition of shipping costs of around $3/MMBtu to Asia would leave offer levels at $16-17/MMBtu DES, sources said. This had resulted as many as three reloads from Europe heard to have gone unsold for May, which were likely to be rolled into June, applying further downward pressure on prices in the coming month.
In addition to available reloads for May, Angola LNG is understood to be preparing to load its fifth cargo in mid-April, after experiencing a reported minor production outage which had taken the facility offline for most of the week. The volumes were anticipated to be offered out on a DES basis through a supply tender.
If the volume can be loaded in the week beginning April 14, the cargo could still arrive in northeast Asia for late May delivery, sources said.
Further highlighting the shift towards more bearish sentiment was a recent buy tender from Thailand's PTT, which was understood to have taken 2 DES cargoes, even though it only tendered for 1, taking advantage of lower offers which had enabled it to source cargoes below $15.00/MMBtu.
Focus was already beginning to shift to June, where buying interest from both Asia and South America appeared to remain thin. No deals were heard to have been concluded for the month as yet, but numerous sources were expecting prices to remain relatively flat on a slew of more supplies from Alaska, Australia, Indonesia, Malaysia and Paupa New Guinea to hit the market after the easter break.
