Falling Prices Encourage Asian LNG Interest

Lower LNG prices have encouraged Asia buyers to increase cargo purchases to increase stocks as protection ahead of winter.

• Over the past week, several large importers in China, South Korea and Japan were seen seeking winter-delivery cargoes amid ongoing production concerns in Malaysia and Nigeria.
• JKM for December has fallen from a peak of over 70$/mmbtu at the end of August down to below 30$/mmbtu.
• "If prices fall below $25/MMBtu, more consumers could come out to restock as there is smaller risk involved," a Chinese importer said.
• Force majeure at Petronas LNG and Bonny Island LNG could impact availability of cargoes for Asia. "Presently, we have sufficient supply, but this would also depend on the situation with Petronas' force majeure notice," a Japanese importer said. "If there is cargo reduction by them, we would need to buy spot cargoes."