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Friday, December 3, 2021

Brazil tops importers of US LNG cargoes in October as Spanish deliveries climb

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Hydro drain, pipeline worries cited for commerce flows

Costs in conventional end-user markets keep excessive

Brazil was No. 1 purchaser of US LNG for the third month in a row in October amid extreme drought that has drained its hydroelectric sources, whereas Spain was an in depth second as pipeline fuel provides confronted constraints, S&P International Platts Analytics information confirmed.

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The shifting commerce flows got here as costs in conventional end-user markets in Europe and Asia remained extraordinarily excessive and congestion on the Panama Canal continued.

Energy information from Brazil’s Nationwide Electrical System operator confirmed that hydro reservoirs stay critically low, with simply 37 TWh within the Southeast and Central area on the finish of October, over 23% decrease than year-ago ranges. That means that Brazil could stay depending on US LNG imports by way of the upcoming winter.

Greater than two-thirds of Brazil’s electrical energy is generated by hydro, prompting fears of blackouts in Latin America’s largest financial system. The tendencies within the current month got here whilst a lot of Brazil noticed above common rainfall over the previous 30 days, US Nationwide Oceanic and Atmospheric Administration information confirmed.

In Spain, in the meantime, importers in late October nominated zero Algerian provides for November through the GME pipeline by way of Morocco. That raised the potential that Spanish pure fuel costs may discover assist heading into winter, offering incentives for spot LNG deliveries even with premiums which have been limiting European cargoes general. PVB/TTF premiums remained weaker than NBP premiums on Nov. 2, as Iberian inventories regarded sturdy.

Spanish inventories have been sitting at over 81% full Oct. 31 however skilled their first stock withdrawal since April, in accordance with information from Fuel Infrastructure Europe.

Throughout October, Brazil acquired 11 LNG cargoes from the US, one forward of Spain’s 10, Platts Analytics information confirmed. South Korea acquired the third-most US LNG cargoes throughout the month at 9, adopted by China at eight and Turkey at seven. Japan, the world’s largest purchaser of LNG, acquired solely 4 US cargoes in October, a couple of third as many as Brazil.

Complete Brazilian LNG imports fell to 13 cargoes in October, 5 fewer cargoes month-on-month. Home fuel manufacturing and pipeline fuel flows from neighboring Bolivia have been inadequate to fulfill its energy wants.

Latin American LNG demand this 12 months has been a cause for Europe being priced out of spot LNG imports at instances.

The S&P International Platts DES Northwest Europe for December was assessed at $24.329/MMBtu on Nov. 2, gaining $1.794/MMBtu day on day. The primary half of December was assessed at $24.229/MMBtu, and the second half was assessed at $24.429/MMBtu. That maintained the intramonth contango at 20 cents/MMBtu in contrast with Nov. 1.

Platts assessed the US FOB Gulf Coast Marker on Nov. 2 at $21.75/MMBtu.

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