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Floating LNG cargoes in Asia find buyers as prices plunge

Reuters  |  SINGAPORE 

By Jessica Jaganathan

(Reuters) - Several liquefied (LNG) cargoes that had been stored on vessels in Asian waters are now heading towards buyers' terminals in China, or as spot prices for the super-chilled fuel have plunged this week to multi-month lows.

At least nine LNG tankers are now on their way or have already offloaded cargoes to buyers after floating off Singapore, Malaysian or waters for up to two months, shipping data from Refinitiv Eikon showed.

The data also shows that at least five laden LNG tankers remain in waters. Three of them have been there holding LNG in storage since the second half of October.

Storing LNG on tankers is generally seen as a riskier bet than holding on the water, given higher storage costs and the fact that LNG cargoes degrade over time by evaporating.

"When the traders started floating the cargoes, the market was in a contango of about $1, but it has now flipped into backwardation, so there is more urgency to sell the cargoes," a said.

Data intelligence company estimates that of 18 LNG tankers it flagged as floating storage in the region last week, 13 are still floating gas, based on speed, days since loading, and lack of destination and diversions.

A contango is a market structure in which prices for cargoes loading in the current month are lower than those loading in forward months. A backwardated structure is the opposite.

Spot LNG prices in are currently trading below $9 per million British thermal units (mmBtu) and could be as low as $8.50 per mmBtu for cargoes being delivered to North Asia, two Singapore-based traders said.

Spot LNG prices for in Eikon are usually updated weekly on Fridays.

The prices given by the traders this week would be the lowest in nearly seven months, and about 15 percent cheaper than last year at the same time, data showed.

"These are not even the distressed cargoes ... Those will likely be sold at lower prices," one of the two traders said.

A warmer-than-average winter has meant that storage levels have been high in top importing countries in Asia, including China, and

Chinese companies also purchased their winter requirements earlier this year, helping to spread out their spot purchases.

The availability of some of the tankers after discharge has helped to ease LNG tanker rates.

Still, the market remains well supplied, with at least two LNG tankers from that were headed to diverting to other destinations, data from and Refinitiv Eikon showed.

(Reporting by Jessica Jaganathan; Editing by Tom Hogue)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, December 05 2018. 15:31 IST