In Freight News 02/06/2015
Delivery of LNG cargoes to the UK is slowing with the arrival of June, tracking the wider spread into the summer between the JKM, and the equivalent month-ahead contract.
On average, from March to May, there were 10 LNG tanker deliveries per month, or approximately two to three a week.
But beyond two cargoes from Ras Laffan and another from Trinidad, all expected to arrive by the end of the week, Platts ship-tracking data showed no other deliveries expected to berth within the next two weeks.
This reduction in arrivals is expected to put further downward pressure on already declining sendout from terminals in the UK.
“The LNG arrival schedule is looking particularly sparse for the first half of June with not a single Q-max or Q-flex sailing westbound from Qatar after Q-flex Al Khuwair which is scheduled to offload at South Hook on [Saturday]; this leaves the potential for a further drop in sendouts after [Saturday] which adds support to BOM,” an analyst with Eclipse Energy, an analytics unit of Platts, said.
Eclipse expects just 33 million cu m of gas sendout from UK LNG Monday, down 44% from the 59 million cu m withdrawn on Friday.
The reduction in arrivals to the UK also tracks a widening spread between the JKM and the equivalent month-ahead NBP contract. At the end of April, the JKM/NBP spread was as narrow as $0.44/MMBtu, while holding at an average of $0.605/MMBtu through most of May.
But the expectation of warmer temperatures had pushed the NBP downwards, widening the spread to as much as $1.255/MMBtu going into the beginning to June.
With temperatures warming in Europe, and demand for gas falling, the widening spread provides greater incentive for volumes to seek value in the Pacific basin, where summer is a demand period due to increased use of air conditioning.
Further ahead, the spread is likely to widen, with the NBP August contract trading at approximately $6.40/MMBtu at the start of this week, while the JKM for the first half of August was assessed at $7.80/MMBtu, a difference of $1.40/MMBtu, continuing to make the Asia Pacific a more attractive destination for cargoes.
