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Asia LNG price rise on firm Chinese demand, eyes on Russian flow

Asia liquefied natural gas (LNG) prices continued to rise this week on the back of higher European gas prices, which fuelled competition from buyers in Asia, while demand is firm from top buyer China.

The average LNG price for November delivery into Northeast Asia LNG-AS was estimated at about $38.50 per metric million British thermal units (mmBtu), up $1.50 from the previous week, industry sources said.

December delivery prices were estimated to be about $38.40 per mmBtu, they added.

Last week, price agency S&P Global Platts’ Japan-Korea-Marker (JKM), which is widely used as a benchmark in the spot market in the region, had surged to a record high of $56.326 per mmBtu, before easing later.

“The market is looking to the extent of uncontracted demand in China for winter following the national holiday. This is expected to emerge, but by how much and when will probably be crucial for shaping market sentiment,” an industry source said.

Facing an ongoing power crunch, amid a shortage of coal for electricity generation, China has been one of heavy buyers of LNG. The country’s September imports of natural gas, both from pipelines and as LNG, were at a nine-month high at 10.62 million tonnes, 22.6% above year-ago levels.

The heavy Chinese buying is reinforcing the link between Asian LNG pricing and the European TTF benchmark, said Robert Songer, LNG analyst at commodities intelligence firm ICIS, adding that events in Europe will continue to influence Asian LNG prices.

“Attention will continue to be focused on (gas transit) capacity auctions on Monday, and what they reveal about Russia’s bookings for November capacity into Europe, as this is the last chance to stock up on natural gas,” he said.

Russia’s Deputy Prime Minister Alexander Novak said on Friday that Russia could resume spot gas sales after it finishes filling its storage reserves.

Novak did not say how soon or in what quantities such sales could take place, but the government has said it intends to keep topping up domestic inventories until Nov. 1.

Freight rates to ship LNG remained high, with LNG freight from the U.S. to Northwest Europe and Northwest Asia approximately at peak levels of $2.50 and $4.50 respectively per mmBtu, according to data intelligence firm Spark.

Pakistan LNG did not receive any offers in a tender seeking eight LNG cargoes for delivery over December to January.

Turkish state energy company Botas is seeking 19 LNG cargoes for delivery over November this year to March next year.

KOGAS International, the Singapore-based arm of Korea Gas Corp 036460.KS, is offering an LNG cargo for loading from the Australian Prelude plant, for delivery into the Northeast Asia region over Dec. 19-22.

Source: Reuters

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