Reuters quoted traders stating that “a fleet of half a dozen tankers carrying unsold liquefied natural gas (LNG) is floating in Singapore and Malaysian waters for up to two weeks as winter demand in Asia looks weaker than initially expected”.
About the vessels
The ships together carry around a million cubic metres of LNG, worth more than $200 million at current spot market prices.One of them, Adam LNG, is carrying 164,000 cubic metres of LNG that originated from the Arctic Yamal project in Russia, with Refinitiv Eikon ship tracking data showing the cargo to be open “for orders”.
The LNG cargoes were purchased ahead of the northern hemisphere winter season, said several traders with knowledge of the matter, declining to be named as they were not allowed to speak publicly about commercial operations.
In Hopeegoo of Contango
“Everyone floated cargoes last month, with a steep contango over October to November, and they now can’t find homes for these floating cargoes,” an LNG broker said.
Contango means prices for future delivery are higher than those for immediate dispatch, making it attractive for traders to hold on to cargoes for later sale.
Many traders were also hoping for a repeat of last winter, when LNG LNG-AS spiked to 2014 highs of $11.50 per million British thermal units (mmBtu) as the top three importers, Japan, China and South Korea, scrambled to meet demand amid China’s gasification programme, unusually cold weather and widespread nuclear power outages.
Import Hope Amidst Mild Winter Forecast
“Some merchants were hoping for another price bull-run this year, and hoped importers would stock up more to prevent being caught short,” said one trader in Singapore.
“That’s not happened – at least yet – as weather outlooks suggest a relatively mild winter, and because a lot of nuclear reactors, especially in Japan, have returned to service,” he said.
Japan is expected to experience warmer-than-average weather between November and January, the country’s official forecaster said this week, implying low demand for heating.
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!