Only as many as 10 cargoes for October loading shipment from the U.S are expected to be canceled by the LNG buyers. This is the lowest number in months as Europe and Asia prices recover, trade sources said. The exact number of cancellation was not clear but trade sources estimating that the cancellation is going to be between 3-10, way lower than 25 cargoes expected to cancel for September loading, and 40-45 cargoes possible to cancel in July and August.
Europe and Asia rising spot prices and the expectations of increased demand for gas during the winter season is most likely to cause the cancellation, said traders. LNG traders based in Singapore explained that currently most of U.S projects are still in the money, but time is still available for buyers to decide whether to take or cancel cargoes. Another reason is, more U.S cargoes are being delivered to Asia, the more chances for the price to be pushed down further, thus, buyers may consider cancelling.
Asia spot prices for cargoes delivered to North Asia has revived to a highest level in many months, as warm weather is expected to boost gas inventory drawdown to power the electricity as demand rises while LNG supply in Australia has been having cutbacks as prolonged maintenance in the production train is still ongoing until 2021.
The gas prices from Dutch TTF this month also increased sharply after gas flows from Russia lowered down, Goldman Sachs analyst said. Bernstein analysts expected winter LNG prices to rise $5 to $6/mmbtu as the market supply was more limited. With the $4-5/mmbtu cash breakeven, the U.S LNG will be allowed to get significant positive cash margins. The U.S cargo flows to China is also projected to increase, but the motive was purely driven by economics not politics.
