Asian LNG Importers Seek Cargo Deferrals as Storage Terminals Report Tank Tops
11.18.2022 By - NEWS

November 18, 2022 [S&PGlobal] – Asian LNG importers are experiencing high inventory levels and tank-tops, which refers to storage terminals reaching full capacity, on the back of a mild start to the winter season that has slowed downstream natural gas consumption, according to several traders and market participants.


The tank-top situation is expected to be bearish for spot LNG prices and is resulting in LNG importers taking measures to delay shipments by extending the waiting time for LNG carriers or asking suppliers to push delivery dates further out until terminal capacity is available.

Asian spot LNG prices have eased from recent highs when it was trading at over $50/MMBtu in August. Platts assessed JKM for December at $24.330/MMBtu Nov. 10. While it is still elevated, it’s dropping to a range where more importers could be incentivized to boost procurement.

South Korea’s key LNG importer Kogas is facing tank-top, market sources in the country said. If the weather remains warmer than usual in Asia and demand in Europe does not pick up soon, the vessel congestions could get worse, they added.

Some entities may need to defer the delivery window or rent other terminals to receive the term volumes in the event of a tank-top, a South Korean market participant said.

At least one Japanese power utility said that it has chosen a later delivery window for its December delivery cargo because there’s a high chance that high inventory levels will continue into next month. A second Japanese utility confirmed that its supplier had agreed to its request to delay the delivery of its cargo until December as downstream demand has not been that strong so far.

Japanese month-end LNG stocks have been hovering above both year-on-year and the five-year average since May, according to the Ministry of Economy, Trade and Industry and latest data showed that Japanese power utilities had 2.53 million mt LNG stock at the end of October, compared with 2.66 million mt at the end of September.

“We have a cargo discharging in late December, but a buyer is requesting to have it delivered in January instead,” a Japanese trader said separately.

China and India

China used to be the last resort for most Asian LNG buyers who purchased surplus LNG cargoes ahead of the peak winter season, to sell cargoes at discount, but this outlet may not emerge this year as demand has been sluggish.

On Nov. 9, PipeChina posted data showing spare LNG receiving capacity at its seven affiliated LNG terminals for December would be 6.5% higher than previously estimated, indicating underutilized terminal capacity. While lower Chinese LNG imports have been due to weak downstream demand and regulated gas prices, traders said December could see high inventory levels as well.

“We are facing tanktop now because of some issues at Tianjin terminal, and cannot afford to add any more injections to our underground storage tanks. We want to issue a sell tender or offer cargoes but are concerned that weather remains mild and deferred cargoes arrive earlier [when storage is not available],” Chinese traders said.

Other Chinese traders indicated that natural gas storage tanks in central and north China were high, but not to the extent of tank top.

“Weather is warmer, so domestic downstream consumption is quite slow, but it could be colder towards late winter. A lot more cargoes being offered for the prompt in December could be floated into January,” one of the traders said.

Meanwhile, even in India, which has seen a sharp drop in spot LNG imports this year, importers have reported a tank-top situation at some terminals. Petronet LNG’s Dahej LNG terminal and Shell’s Hazira terminal are requesting end users to evacuate gas at a higher rate and postpone cargo deliveries by 3-4 days, Indian traders said.

Pro Trial: Access 10,390 Tank Terminal and Production Facilities

10,390 tank storage and production facilities as per the date of this article. Click on the button and register to get instant access to actionable tank storage industry data

Angel CCS JV and Yara Partner for Carbon Capture and Storage Study
04.19.2024 - NEWS
April 19, 2024 [Pipeline & Gas Journal]- The Angel CCS Joint Venture will collaborate with Ya... Read More
Kinder Morgan Meets Profit Estimates, Sees New Demand from AI Operations
04.19.2024 - NEWS
April 19, 2024 [Reuters]- Pipeline and terminal operator Kinder Morgan (KMI.N), opens new tab on ... Read More
Cepsa and Evos Join up for Green Methanol Storage in Spain and the Netherlands
04.19.2024 - NEWS
April 19, 2024 [Storage Terminals Magazine]- Spanish energy company Cepsa has forged an agreement... Read More
Linde to Increase Green Hydrogen Production in Brazil
04.19.2024 - NEWS
April 19, 2024 [Linde]- Linde (Nasdaq: LIN) announced today its subsidiary White Martins will bui... Read More