LNG: India LNG Spot Demand To Fall As Longer-Term Contracts Signed
Feb-27 08:49
Indian demand for spot LNG cargoes expected to slow as procurement shifts to medium-term and long-term contracts, carrying risks were spot prices to persist below term prices, Platts reports.
- A mix of new long-term contracts representing nearly 6 million mt/y of LNG have commencement dates over the next two years, eating into India’s spot market demand.
- Two are starting in April – GAIL and QatarEnergy for one cargo per month, and BPCL and ADNOC for six cargoes per year, both for 5 years. Both contracts are priced similar; around 120% of Henry Hub prices with a constant of $5.6-$5.8/MMbtu, Platts reports.
- These contracts are cheaper than current spot LNG prices of around $13/MMBtu and the forward curve for LNG in 2025 and 2026, but they will become more expensive for buyers when spot prices fall from 2027 onward, according to Platts.
- The approach is dangerous for India, Platts sources said, as customers can default if spot LNG prices become consistently lower than the contracted term prices.
Source: Platts
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BUNDS: /SWAPS: Schatz/Buxl ASW Spread Pinned Near Cycle Highs
Jan-28 08:48
{GE} BUNDS/SWAPS: Continued outperformance in the front end of ASW spreads has taken the Schatz/Buxl ASW curve to fresh cycle highs near 50bp (based on 3-month Euribor ASWs).
- Increasing free float and fiscal/issuance risks have driven much of the move in the spread.
- The same drivers should continue to limit any widening episodes in long end spreads, although positioning presents some upside risk to long end spreads (in the case that an upside catalyst becomes apparent).
Fig. 1: Schatz/Buxl ASW Spread (Vs. 3-Month Euribor)
Source: MNI - Market News/Bloomberg
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Jan-28 08:37
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GILT AUCTION PREVIEW: 1.125% Sep-35 linker
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- This will replace the 0.75% Nov-33 linker as the on-the-run 10-year issue.
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- Timing: Results will be available shortly after the bidding window closes at 10:00GMT with a further GBP375mln available to successful bidders via the PAOF.
