The Korean Meteorological Company has predicted a hotter winter early-next 12 months, in comparison with its earlier forecast of colder climate in December on account of the La Nina impact.

The KMA highlighted a 40% risk of upper temperatures in January and February subsequent 12 months in comparison with earlier years, implying that the temperature in early-Q1 will probably be comparatively milder.

Ongoing ‘tank-top’ state of affairs

Market contributors concern the warmer-than-expected winter forecast for early-Q1 may exacerbate the continuing ‘tank-top’ conditions — indicating provide was ample — at main LNG receiving terminals in South Korea.

Kogas was heard going through excessive stock ranges at its main terminals in Incheon and Pyeongtaek, in accordance with a number of market sources.

“The corporate requested for deferments, and a few suppliers agreed,” a supply at one of many producers stated. “[I heard] they’re in discussions to divert to different [South] Korean terminals.”

“I heard Kogas confronted tank-top, with leakage degree at round 93% at considered one of their tanks two to a few weeks in the past,” a dealer based mostly in Singapore stated, including: “They’re contemplating leasing personal import terminals like Gwangyang to handle their excessive storage ranges.”

One other dealer in Singapore stated, “I doubt whether or not personal LNG importers’ terminals may be rented out, as in addition they might need confronted excessive stock conditions.”

Kogas owns 5 out of the seven regasification terminals within the nation, which incorporates Incheon, Pyeongtaek, Samcheok, Tongyeong and Jeju — accounting for about 89% of the entire capability within the nation. The corporate has a mixed LNG storage capability of round 11.6 MMcm, in accordance with market sources.

The utilization charges on the Pyeongtaek terminal rose 5.47% on the 12 months to round 9.39 million mt within the third quarter, whereas these at Incheon and Tongyoung terminals had been increased by 0.24% and 5.36%, respectively, to 9.907 mil mt and 6.166 mil mt throughout the identical interval, in accordance with the corporate information.

Gwangyang terminal, the fifth largest within the nation, is owned by POSCO and SK Group, and KOMIPO has the rights to make use of it. Boryeong terminal is owned by SG Group and SK Group.

Potential reselling or diverting extra volumes

Market contributors anticipate the state-run gasoline utility Kogas to resell immediate spot volumes of gasoline amid the continuing ‘tank-top’ conditions.

“There are some talks that they [could] resell a number of the immediate December and January cargoes bilaterally,” a 3rd dealer based mostly in Singapore stated.

A South Korean dealer based mostly in Singapore stated, “The abroad subsidies can resell the spot cargoes, however I’m not positive whether or not the headquarter can approve the resales simply.”

Kogas didn’t instantly reply to a request for remark when reached out by S&P International.

“If there’s an overhang in provide, they may think about diverting the surplus volumes to close by international locations, comparable to China or Japan; therefore, the excessive stock may be consumed as soon as the chilly winter climate kicks off,” an business supply based mostly in South Korea stated.

“The ‘tank-top’ challenge has been happening nearly each winter, because the state-run entity put the excessive precedence on the provision safety,” one other South Korean market supply stated earlier, including: “China was the ‘final resort for many Asian LNG importers who are inclined to overly-purchase the winter LNG volumes forward of the winter season. Nonetheless, the state of affairs this 12 months seems extra extreme than in earlier years.”

In opposition to this backdrop, sluggish demand on account of COVID-19 lockdowns in China additional dampen risk of diverting extra cargoes.

“Tank-top’ [is] nonetheless ongoing, [we are] contemplating reselling, floating cargoes and leasing ship, or time swap,” a supply at one of many Chinese language state-owned corporations stated.

In the meantime, there’s nonetheless room to resell cargoes to native entities.

“Though Kogas is going through excessive stock, sure patrons like SK E&S may want extra spot cargoes because of the delayed restart of the US Freeport LNG,” a dealer based mostly in South Korea stated, including that each one depends upon the restart schedule, which is projected round mid-December.

Platts JKM was final assessed at $31.029/MMBtu Nov. 28, down 14.36% on the 12 months, in accordance with S&P International information.