LNG cargo price drops with only late North Asia deliveries staying above $5.00 per MMBtu

Friday, 30 August 2019
Free Read

Singapore LNG spot cargo prices dropped by an average of 2.4 percent from last week for Southeast Asia and the Middle East and India, with only North Asian cargoes maintaining values over US$5.000 per million British thermal units for November amid continued over supply.

The Singapore average index for October declined to US$4.192 per MMBtu from last week’s October average of US$4.239 per MMBtu, a drop of 2.6 percent.

Singapore’s latest LNG indices released on August 29 included a price of US$4.070 per MMBtu for southeast Asia for the second half of September, edging up to US$4.090 per MMBtu for the first half of October.

Prices fell as the market remained oversupplied while North Sea Brent crude was still steady at around $61 per barrel.

Southeast Asia cargo prices for the second half of October moved higher to US$4.293 per MMBtu and were highest for the first half of November at US$4.880 per MMBtu.

The Sling is an index series for LNG developed by the Singapore Exchange and its subsidiary Energy Market Company.

It is a spot index for cargoes “on the waters in the vicinity of Singapore which could go into any port” and based on cargo sizes of 135,000 cubic metres capacity to 175,000 cubic metres capacity.

The North Asian price fell by about 2.3 percent to an October average of US$4.425 per MMBtu.

North Asia cargoes for the second half of September were at an average of US$4.288 per MMBtu and were only slightly up for the first half of October at US$4.325 per MMBtu, before increasing again to US$4.525 for the second half of October.

The first half of November price for the North Asia market was down 1.4 percent compared with last week and was quoted at US$5.125 per MMBtu.

The North Asia prices are for delivery ex-ship (DES) to all ports in Japan, Korea, Taiwan and China.

The Dubai-Kuwait-India Sling index for regional cargoes shipped to India and the Middle East averaged US$4.219 per MMBtu for October, down 2.4 percent from last week.

The DKI index, based on a cargo of between 138,000 cubic metres capacity and 170,000 cubic metres, was at US$4.112 per MMBtu for the second half of September and was only slightly up at US$4.114 for the first half of October.

The second half of October DKI price gathered pace to US$4.324 per MMBtu and for the first half of November was short of US$5.00 per MMBtu at US$4.913.

The SGX LNG Index Group (Sling) is an initiative by SGX and EMC for spot LNG price discovery.

It is a benchmark based on assessments of LNG cargo value by market participants. They provide assessments based on the value of an LNG cargo at a specific location for delivery.

The Sling is based on participants submitting assessments to determine an index value.

“The participant pool consists of a broad group of market players to ensure that any Sling Assessment is as representative of actual market conditions as possible,” says the SGX, while pointing out that the participant is kept confidential at all times.

The SGX-EMC LNG prices include both lean and rich cargoes.

However, the Singapore Exchange and the EMC plan to cease publishing LNG prices soon.

The Singapore EMC explained that it would “endeavor to continue publishing the Sling for three months” after the end of July.

The SGX LNG Index Group (Sling) was launched in 2015 in response to expressions of need for a trusted price formation process for Asian LNG.

“However, usage of the Sling indices has remained low,” the SGX and EMC explained.

“Subscribers with linked financial contracts are advised to migrate such contracts to an alternative benchmark or to otherwise account for the Sling’s cessation,” they added.

Related Video

Free Read