The Platts January Japan Korea Marker ended the Asian trading week Friday lower at $17.425/MMBtu than $17.50/MMBtu at the start of the week, as buyers managed their high inventories, and sellers waited to see if the recent burst of cold weather would result in utilities facing short positions, spurring late January demand.
Sources said Japan's Kyushu Electric bought a first-half February delivered cargo from Norwegian Statoil's Snohvit for $18.00/MMBtu, but the deal could not be confirmed directly with Statoil or Kyushu Electric.
As of Friday, there were no new updates on the Nigeria LNG free-on-board tender, which closed Tuesday, for two LNG cargoes loaded December 10-12 and December 12-14.
Various sources said Nigeria LNG's previous tender, ended November 15, was not awarded due to difficulties in securing a vessel.
A trader said GSPC's buy tender which closed last week for an early January cargo was probably not awarded due to offers being too expensive. "I think the thing we can take from the fact nothing has been heard from GSPC is they didn't meet their price target for a January cargo," the trader said.
A source said a trader had not revised his second-half January offer lower, even though his cargo was becoming more prompt, as winter weather was settling in. "It's very cold right now in some parts of the Far East...so we may see additional demand pop up," the source said.
Japan is approaching its winter season, with power demand peaking from December to February. The colder weather has a direct impact on kerosene, fuel oil and LNG consumption for power and heating, where kerosene is used as heating oil, while crude and fuel oil, as well as LNG, are used for power generation.
Meanwhile, due to previous procurement efforts and recent milder weather, utilities in North Asia have drawn down less of their LNG inventories to generate power, with many North Asian utilities saying existing inventory levels were high enough to allow them not to begin additional purchases until January next year.
All 12 regions in Japan, from Hokkaido in the north to the southwest Okinawa and Amami regions are forecast to experience above-average temperatures over the 30-year average for the month ending December 25, the JMA said Friday in its weekly forecast.
Several North Asian utilities confirmed prior shipments and term contracts had left them with sufficient LNG inventories to make it through January.
The first trader said: "Demand is just not there in Japan for January," with another trader adding the only firm January demand was coming from China and India, and South Korea could potentially take more cargoes.
"Kyushu Electric and Kansai Electric have already finished procurement for January, and depending on the price level, Kogas may still have room for a January cargo," another trader said.
A different trader said he was seeing "no demand for January, but I think Korea should have demand...PetroChina only has two cargoes for December, so if the price comes off, China will continue to buy, as will India, which is in a similar situation to China."
The first trader said: "I haven't heard of any Korean companies bidding for any cargoes in January, which is quite unusual for this time of the year," adding South Korean companies may be trying a different strategy this year, but probably had more winter demand requirements.
The contango between second-half December and second-half January opened up to 90 cents/MMBtu by Friday, after starting the week at 75 cents/MMBtu, a reflection of buyers having satisfied near-term demand and looking for cargoes further out.
Platts December DES west India ended Friday lower at $15.60/MMBtu, after starting the week at $15.65/MMBtu. A South Asian utility source said he was still evaluating demand for January, and there were sellers intent on supplying cargoes to India, but declined to provide further information.
Platts FOB Middle East ended the week at $14.50/MMBtu Friday.
The Asia Pacific Day Rate gained $4,000/day over the week, settling at $112,000/day by Friday, as recent charters firmed up LNG carrier day rates.
"The owners of the WilEnergy are claiming they chartered their vessel at around 80,000/day, which means the market is firming up," a shipping source said, adding "[it] may result in a small increase for owners who have modern ships, with a premium of around $30,000 being a reasonable differential." Another shipping source said "a $30,000-35,000/day [premium] for newer vessels is about right."
