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Tuesday, 01 September 20
COVID-19 PUSHES US LNG INTO A TIGHT SPOT - DREWRY
The pandemic-led weak projections for economic growth will derail US LNG exports in full-year 2020 with the country also losing ground in the long term due to major delays in liquefaction projects.
US LNG exports were strong between 2017 and 2019, driven by the shale gas boom, rising demand for natural gas in Asia and higher global LNG prices. The US exported 3.9 million tonnes of LNG in 2016 which increased at a whopping 114% CAGR to 38.2 million tonnes in 2019.
The US is currently the third-largest global LNG exporter with six operational LNG export terminals aggregating 62 mtpa of liquefaction capacity and another 41 mtpa capacity under construction. Brownfiled projects such as Sabine Pass, Corpus Christi, Cameron LNG and Elba Island will reach their full capacities between 2020 and 2027 and greenfield projects such as Golden Pass LNG and Calcasieu Pass will become operational during the same period.
Existing LNG production capacity in the US has been impacted by the pandemic with over 110 LNG cargoes being cancelled by Asian and European customers during June-August due to the low LNG spot price which narrowed the US-Asia and US-Europe price arbitrage. Moreover, major US LNG importers – Japan, South Korea and Taiwan – have seen their LNG demand dwindling, while US-China LNG trade has not been able to pick up as some would have hoped. With projections for LNG spot prices below $5 per MMBtu over the next few years, we expect more cancellations to occur in the coming years making the US a ‘swing LNG producer.’
The ‘second wave’ of LNG liquefaction including mega-LNG projects (such as Driftwood LNG, Port Arthur LNG, Golden Pass, Calcasieu LNG, Plaquemines LNG, Magnolia LNG, Jordan Cove LNG and Rio Grande LNG) constitute over 160 mtpa of planned liquefaction capacity. These projects were initially expected to be operational by 2025, but are currently facing major trouble in securing funding and long-term supply deals required for reaching an FID. Only two projects (Golden Pass and Calcasieu Pass LNG) have attained the FID and have started construction, while over 10 major LNG liquefaction projects which were expected to reach the FID in 2020 have been delayed due to low LNG prices and weak economic growth projections.
The future for these projects looks uncertain as most of them had fixed the all-inclusive selling price for LNG at $8 per MMBtu for Asia ($2 for Henry Hub, $3 for liquefaction, $2-3 transportation) which is highly uncompetitive in the current market. Only a marginal recovery in LNG prices is projected for the next few years which further increases the woes for promoters of the planned projects in securing funding and supply deals. Meanwhile, a major competitor for US LNG, Qatar enjoys a break-even price below $2 per MMBtu as well as proximity to the Asian market. Qatar’s North Field Expansion (NFE) project’s Phase-1 (33 mtpa) and Phase-2 (16 mtpa) are also backed by the government, increasing the probability of their completion and in the process creating more trouble for the planned US projects.
The pandemic has already created severe financial woes for some US projects. For instance, a deal between Driftwood’s promoter Tellurian and India’s Petronet LNG fell through, raising doubts over the proposed 27.6 mtpa project. Although negotiations are still underway, Tellurian faces high competition from Russian and African projects. Shell has also exited the Lake Charles LNG project, increasing the uncertainty of the project for the other participants, while Magnolia LNG’s promoter LNG Ltd has been taken over by another entity after it went bankrupt, delaying the project further.
Some projects like Lake Charles and Rio Grande have gone back to the drawing board and plan to reduce trains to decrease the capex cost while others are cutting workforce and raising loans to keep their projects afloat. Most project developers are hopingfor an easing of US-China tensions and the prospect of securinga share of the rising LNG demand in China, which is projected to grow at over 10% CAGR between 2020 and 2025. However, China’s LNG importers may not be too keen on long-term supply deals with US companies given the current low prices and the uncertainty over US-China trade relations. Ties between China and Qatar are also strengthening with the latter reserving 16 LNG carrier newbuild berths at a Chinese shipyard.
Overall, project delays are expected to hurt the US deeply in the long term while other LNG producers – Qatar, Russia and Mozambique – gain from the narrowing supply-demand gap from 2023 onwards. Qatar has already reserved LNG carrier newbuilding berths at shipyards and has selected a technology partner for the NFE project while Russia’s Arctic LNG-2 is on schedule with added investments made for Arc-7 LNG carriers and large FSUs to keep the Northern Sea Route (NSR) active most of the year.
US LNG woes have had a cascading effect on the LNG shipping market, depressing charter rates. The fall in US-Asia LNG trade has negatively affected shipping demand which, along with cancellations, has increased vessel availability in the market. At present, the fall in charter rates is arrested by a rise in floating storage, but this situation is not sustainable in the long term with LNG prices remaining depressed and over 120 LNG carriers scheduled to be delivered during 2020-21.
An estimated 140 new orders for LNG carriers during 2020-23 would be left hanging if the planned US LNG projects fail to progress. The loss of orders will impact LNG shipyards which have already begun to reel under low orders (only eight vessels were ordered in 1H20). While project-linked ordering from Qatar, Russia and Mozambique will bring some respite the drying up of speculative orders will most certainly be a huge loss for the LNG shipping market as a whole.
To conclude US LNG exports will grow at a slower pace in the coming years as long-term supply deals have already been signed for the under-construction projects. However, stiff competition from other producers amid low LNG prices will impact their share in the Asian market. The fall in US-Asia trade will negatively impact shipping demand and further reduce the number of vessels required for LNG trade. Overall, we expect US LNG exports to be seasonal in the long run with Europe playing a much larger role in the future.
Source: Drewry
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Wednesday, 14 October 20
CHINA COKING COAL FUTURES RALLY ON REPORTED BAN ON AUSTRALIA CARGOES - REUTERS
Dalian coking coal futures rallied for a sixth straight session on Tuesday after reports surfaced that China had stopped buying coal from Australia ...
Wednesday, 14 October 20
MARKET INSIGHT - INTERMODAL
The tanker market has experienced severe freight rate and asset value declines over the past 5 months. A potential market upturn may arise in the c ...
Friday, 09 October 20
INDIA'S COAL IMPORTS IMPROVE SOMEWHAT, BUT RECOVERY IS UNEVEN - REUTERS
India’s coal imports, depressed by the impact of coronavirus this year, regained ground in September, but in an uneven uptick – shipmen ...
Thursday, 08 October 20
CHINA'S COAL IMPORTS FROM INDONESIA DECLINED 16.4% Y-O-Y, TO 80.2 MLN TONNES IN THE FIRST 9 MONTHS OF 2020 - BANCHERO COSTA
China's coal imports boomed in 2019, surprising many who had expected the government would clamp down strictly on shipments.
...
Thursday, 08 October 20
GLIMMER OF LIGHT FOR COAL, BUT SHORT TERM - FNARENA
Is coal on the rebound? Demand appears stronger and supply reductions have underpinned a tightening market. Certainly, the Newcastle thermal coal p ...
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- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Economic Council, Georgia
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- White Energy Company Limited
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Planning Commission, India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Eastern Energy - Thailand
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
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