Asian spot liquefied natural gas (LNG) prices held largely steady this week as healthy demand and relatively tight supplies supported the market. LNG cargo prices for delivery in September were around $10 per million British thermal units (Btu), unchanged from last week, while cargoes for delivery in October were priced around $1 per mmBtu higher, traders said.
Consumption of power fuels like LNG and thermal coal has been unseasonably strong as severe heatwaves, especially in Asia and Europe, have pushed up demand for residential and industrial cooling. Meanwhile, maintenance work at the Australia Pacific liquefied natural gas (APLNG) plant in September will take some supply from the market, while Malaysian LNG exports hit a four-year low due to ongoing pipeline trouble.
Analysts said a threat late last week by China's government to slap import tariff on US LNG imports could further push up prices. "If China implements tariffs on US LNG imports, we would expect to see spot LNG prices move higher in the short-term," ANZ bank said on Friday.
Shipping data shows that US LNG sales to China have already slumped to 130,000 tonnes in July from almost 400,000 tonnes in May, while supplies from the Asia/Pacific region have increased. US LNG exports only started in 2015, and sales to China were a booming business opportunity for the American natural gas industry, while China needs LNG to meet its soaring demand amid its programme of moving millions of households and factories from coal to gas.
"China's ongoing campaign to switch from coal to gas heating has seen consumption demand rise 20 percent this year," ANZ said. To meet rising demand, PetroChina is in advanced discussions with top exporter Qatar to purchase LNG under short- and long-term agreements, sources said this week.
In another sign of China's rising imports, gas distributor ENN received its maiden cargo for the country's first major privately-owned LNG import terminal this week, Thomson Reuters Eikon shiptracking data showed.
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