US LNG cargo cancellations mount for July as weakened global demand persists - GoHaynesvilleShale.com2024-03-29T02:27:54Zhttps://gohaynesvilleshale.com/forum/topics/us-lng-cargo-cancellations-mount-for-july-as-weakened-global?commentId=2117179%3AComment%3A3907918&x=1&feed=yes&xn_auth=noAnalysis: US LNG exports to E…tag:gohaynesvilleshale.com,2020-05-29:2117179:Comment:39079182020-05-29T15:56:19.384ZSkip Peel - Mineral Consultanthttps://gohaynesvilleshale.com/profile/ilandman
<p><strong>Analysis: US LNG exports to Europe already crumbling ahead of cancellations </strong>spglobal.com/platts</p>
<p><a href="https://www.spglobal.com/platts/en/search-results?author=Neil%20Hunter">Neil Hunter</a> Editor <a href="https://www.spglobal.com/platts/en/search-results?editor=Keiron%20Greenhalgh">Keiron Greenhalgh</a> Commodity <a href="https://www.spglobal.com/platts/en/commodities/lng">LNG</a>, <a href="https://www.spglobal.com/platts/en/commodities/natural-gas">Natural…</a></p>
<p><strong>Analysis: US LNG exports to Europe already crumbling ahead of cancellations </strong>spglobal.com/platts</p>
<p><a href="https://www.spglobal.com/platts/en/search-results?author=Neil%20Hunter">Neil Hunter</a> Editor <a href="https://www.spglobal.com/platts/en/search-results?editor=Keiron%20Greenhalgh">Keiron Greenhalgh</a> Commodity <a href="https://www.spglobal.com/platts/en/commodities/lng">LNG</a>, <a href="https://www.spglobal.com/platts/en/commodities/natural-gas">Natural Gas</a>, <a href="https://www.spglobal.com/platts/en/commodities/shipping">Shipping</a></p>
<p>Topic; <a href="https://www.spglobal.com/platts/en/market-insights/topics/lng-commoditization">LNG Commoditization</a></p>
<p>London — After a dominant display over the last gas winter, US LNG exports to Europe have weakened considerably so far in May, even before widespread cancellations are poised to bite in the coming months, an analysis of S&P Global Platts Analytics data indicates.</p>
<p>Poor economics for US exports of the fuel appear to have already ravaged the viability of shipping to Europe, and as European natural gas hub prices now languish below the key US Henry Hub benchmark and feedstock gas valuations, other Atlantic Basin exporters are now making inroads where appetite still exists in Europe.</p>
<p>Out of the 6.34 million mt of LNG — equivalent to 8.756 billion cu m of gas — exported so far in May to Europe's key trading hubs, namely France, Spain, Italy, Belgium, the United Kingdom and the Netherlands, only 15.6% originated from the US. That share of the pie is a sharp decline from 23.6% in April and a shadow of the US' former position as market leader, which saw it deliver a third of all imports at its peak in November.</p>
<p>This was most notable in a complete absence of exports to the UK, which had been a linchpin of US LNG players' strategy as it quickly rose to market leadership. Both total US exports to Europe and physical UK imports of LNG were the lowest since November in May, the analysis show.</p>
<p>Global LNG players shipping to Europe could still be finding opportunities if their positions are well hedged, according to sources.</p>
<p>Exports are still viable "if they can fully sink the cost of their shipping and the landed LNG price is not heavily negative to hub prices," one LNG market participant said. "Otherwise, it just doesn't make sense."</p>
<p>"Now does not matter if both legs of the trade were hedged then. If they were not, then you could find something going from in-the-money to out-of-the-money by delivery," the source added.</p>
<p>Looking forward, it is understood that 20 LNG cargoes that might otherwise have been shipped from US liquefaction plants have been canceled across the month of June, while this figure is estimated to be between 40 and 50 shipments for the month of July.</p>
<p>In context, the US has delivered 14 cargoes to Europe's trading hubs in May, effectively halving March's total both in absolute and volumetric terms, and rapidly heading back toward late 2018 levels.</p>
<p>Aggregate global exports from the US paint a similar picture. While summer demand levels are undoubtedly a factor, the US nevertheless experienced a sharp decline in exports, shipping 4.812 Bcm of gas equivalent globally so far in May, a decrease of 22% on the month.</p>
<p>The European component of this figure constituted 28% of all US exports, compared with April's 37%, which could possibly indicate a shift in focus to Asia.</p>
<p><strong>PLAYING THE LONG GAME</strong></p>
<p>Smaller LNG producers are capitalizing on faltering US exports, the analysis suggests, with market sources also reporting that some players may be topping up long-term commitments with spot production.</p>
<p>So far in May, Qatar remains the market leader with 27.7% of European imports sourced from the country, and has been bullish on its future export potential, while Nigeria, in capturing a 13.5% share of European trade, has experienced its best ever month for shipments to the region, likely as a culmination of a new approach.</p>
<p><strong>"Qatari production costs are super cheap and they are not going to be the first ones to shut, hence the ongoing shipping to Europe," the source said.</strong></p>
<p>Adding: "Nigeria is slow steaming tankers to stretch out their obligations but keep production going."</p>
<p>There are also faint signs that Asia may be attracting an increasing number of Qatari cargoes, as the country's 7.471 Bcm of May exports comprised 32% heading to Europe, down from 38% in April.</p>
<p>Trinidad and Tobago, Norway and Angola made up the rest of May's LNG supply mix outside of Europe's Top Five, and have successfully picked up trade in France and the Netherlands, which still have inland storage demand to meet.</p>
<p>Russian LNG from the Yamal Peninsula, one of the Top Five exporters, also targeted these destinations in May, sending over half of its shipments to active import terminals.</p>
<p>Yamal sent its first summer cargo to Asia during May, although Platts Analytics data also indicates that as many as five Yamal shipments could land in Europe before May delivery ends; complementing what it has already delivered, and showing a preference for the shorter route for now.</p>
<p>The analysis also shows how Spain has become the US' key target market, receiving half of the US' shipments to Europe, and plugging a gap vacated by Russia and Qatar, with the latter of these primarily focusing on exports to the UK amid weak demand in Asia.</p>