News Post
Bursting natural gas storage chokes off North Asian LNG demand
Rising gas storage levels in North Asia are denting demand for LNG ahead of a warmer than expected winter, driving at least one utility in Japan to resell winter cargoes it does not need, regional trade sources told Reuters.
Storage levels in Japan and South Korea are estimated to be at their highest since at least 2015, according to data from Refinitiv Eikon. Gas tanks are brimming in China as well, according to trade sources.
North Asia's gas inventory typically peaks in October before it starts getting drawn down, but this year there are no signs yet of stocks falling, according to the data.
"Due to warmer weather than usual, Japanese buyers' demands are low and tank inventories are high," a trader familiar with the Japanese LNG market said on Friday. At least one utility is trying to sell winter cargoes that it does not need due to high inventory, he added.
Japan is likely to experience warmer-than-average weather between November and January, the country's official forecaster said last week, implying low demand for heating. Nuclear power plant restarts at the world's top LNG importer are also denting demand for the super-chilled fuel. Electricity generation using solar power has been growing in some parts of Japan, which is eating into LNG demand, a second source familiar with the Japanese market said.
Chinese buyers are also expected to slow down spot purchases due to full storage capacity, a source familiar with the Chinese gas market said.
"I think we are quite balanced and don't have too much requirement at this stage," the source added.
TANKERS
LNG is still being stored in vessels off Singapore and Malaysia waters for up to three weeks, unable to find buyers, in an unusual and expensive move.
At least half a dozen LNG tankers have been floating LNG off Singapore and Malaysian waters, according to Refinitiv Eikon shiptracking data.
Traders are betting that demand will increase when it starts getting colder.
"Prices are very low. If they sell and demand starts to appear, the prices will rise again and it will be a big loss," a Singapore-based trader said, adding that the companies are likely waiting for winter demand to set in.
Source: REUTERS
For subscriptions or a demo:
Sam Hassaniyeh
Subscription Executive
Phone: +44 203 4092242
For questions or to give feedback:
Thad Pittman
Senior Researcher
Phone: +1 (713) 525-4605
Download our brochure today!
Project News