Prelude sets sail, Australian government moves to restrict exports

TTF jumps on Australian strikes officially beginning while European balance tightens further TTF increased this week on Australian strikes officially commencing as of 8 Sep. The move in TTF per 13 Sep settles made up for the decline we saw last week, with Oct increasing by 20%. Nov increased by 9% and the rest of the curve saw some increases, as well. NE Asia remains relatively unchanged week-over-week, but it’s expected to increase soon as it catches up with the TTF move. Henry Hub increased this week to $2.7 despite offsetting bullish and bearish events.

Prices lacked broad support in May, though pre-monsoon restocking by Indian buyers did generate a minor, short-lived price uptick. As such, Australian PLV FOB price declined by nearly US$40/t over the month. We don’t expect prices to improve in June-August, given low demand in China and India, and they will only recover back to US$220/t entering September and October when construction activity resumes on a larger scale. China remains our biggest concern as market confidence in the country has remained consistently fragile. Buying interests are cautious and domestic production has remained relentless. As such, the China CFR price will be below US$220/t before this autumn. Supply from Australia will continue to recover from earlier disruptions due to wet weather and rail delivery issues. As such, we have lowered our price forecasts for the second half of the year to an average of US$213/t.