The biggest spike in Asian natural gas prices in more than six months has made buyers in China pause spot purchases.
(Bloomberg) — The biggest spike in Asian natural gas prices in more than six months has made buyers in China pause spot purchases.
Benchmark prices rose 19% to $11.58 per million British thermal units on Wednesday, the biggest one-day gain since last November, according to data from S&P Global Commodity Insights. That surge is dealing a blow to renewed demand for the fuel from price-sensitive emerging economies, said traders.
Asian gas prices have rallied amid hot weather and supply outages in Europe including disruptions in Norway that are expected to last through the middle of next month. That’s pushed up European prices and intensified global competition for cargoes.
China’s smaller importers are reluctant to purchase spot cargoes because domestic gas prices in the country are cheaper at around $8 to $9 per million Btu, traders said. That’s a reversal from earlier this month when falling prices had brought the companies back to the market. Elsewhere in the region, Indian Oil Corp. and Gail India Ltd. canceled purchase tenders this week due to expensive offers.
“Given the continued supply disruptions from Norwegian pipeline gas into July, Europe prices are having to react and try once more to outcompete Asian LNG prices,” said Ciaran Roe, global director for LNG at S&P Global Commodity Insights. Current prices “should halt most such opportunistic spot buying from certain Asian countries that have sufficient domestic alternative fuel buffers,” he said.
Bangladesh and Thailand bought fewer cargoes than they were originally seeking, possibly due to higher prices.
- Rupantarita Prakritik Gas Co. purchased an LNG cargo on a DES basis for July 23-24 delivery to Bangladesh at $13.39/mmbtu from Excelerate Energy, while no decision was made on the July 10-11 delivery cargo
- Thailand’s PTT purchased three out of nine LNG cargoes it was seeking on a DES basis for Aug.-Nov. delivery
Buy tenders:
Sell tenders:
–With assistance from Kathy Chen.
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