LNG import prices: Local demand, global cues may trigger price hike.

A fine demand-supply balance in the global spot LNG market has kept LNG prices range-bound during the past six months, despite the recent spurt in crude oil prices.

However , high winter demand, prolonged shutdowns at Japan's nuclear power plants and China's increasing import capacity could lead to higher prices. India is the world's fifth biggest importer of LNG, which contributes one-third to the total domestic natural gas consumption . Approximately 70% of India's LNG imports are on a long-term contract, while the rest is procured on a spot basis.

Japan is the world's biggest LNG importer, which has seen demand shoot up after the nuclear disaster of 2011. Importers have already started booking cargoes for delivery in October and November but the pricing is not seen going up despite a seasonal jump in demand. Higher additional availability, particularly from the 5.2-MTPA plant commissioned recently in Angola , apart from other countries such as Nigeria, Norway and Trinidad & Tobago, has weighed on prices.

However , demand could grow faster than supply. Japan's nuclear power plants will remain shut longer than earlier expected. China is adding an import capacity of almost 15 MTPA in 2013 and 2014, while Brazil is using spot LNG to compensate for the fall in hydro power in a drought year. Spot LNG prices may start going up as all these start to have an impact.

Source : economictimes.indiatimes.com