The September prices for Asian liquefied natural gas (LNG) have risen to around US $15.50 per million British thermal units (mmBtu) during the week as high demand in Asia continued to draw cargoes from the Atlantic Basin. Japanese demand, which has been rising at a record pace this year, continued to be a driving factor, with utilities ramping up gas-powered units to compensate for nuclear reactors shut in the aftermath of the March earthquake, sparking a runup in LNG prices.
Spot LNG prices in the Pacific have risen by over 50 per cent since March largely due to the increase in Japanese demand, with some offers near $16 per mmBtu for October cargoes, traders said. The supply tightness caused by growing Japanese demand has attracted greater Atlantic Basin supply to Asia where LNG is sold at a significant premium. Japan bought its first LNG supplies from Norway for the first time since 2008 via Kyushu Electric Power Co and the cargo is expected to arrive in September." Demand is still quite strong and supply is limited and constrained given the shipping situation," one market source said.
LNG tankers have been in short supply as LNG demand has grown with rates rising to US $96,000 per day, according to Waterborne LNG analysts, and the trip from the Atlantic Basin to Asia has only exacerbated the problem: "The longer voyage time associated with taking Atlantic Basin LNG to the Far East has put a real strain on the shipping market; this has reduced tanker deliverability rates which in turn frees up LNG cargoes, which need to be sent out in order to continue with production."
Chinese demand was also higher, with imports at a new record of 1.18 million tonnes in July, up by 13.5 per cent since June. Imports reached 6.36 million tonnes in the first seven months of 2011, up by 32.5 per cent since last year, according to the report. This week China also announced that it will grant tax rebates for gas imports, a move that would reduce state energy company losses and may marginally increase spot LNG imports. In the Atlantic Basin, US natural gas prices were steady at around $3.92 per mmBtu after closing slightly higher on Thursday. British gas prices were at around a $4.93 per mmBtu premium in comparison