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UPDATE 1-Singapore to stop 'Sling' LNG indices, sheds hopes of main price hub

Tue 30th July, 2019 5:19am
* Sling indices will not be published from Nov
    * Result of low participation and usage - SGX
    * Loses to main spot benchmark by S&P Global Platts

 (Adds details, analysts' comments and background)
    By Jessica Jaganathan
    SINGAPORE, July 30 (Reuters) - Singapore Exchange will stop
producing and publishing its spot price indices - Sling - for
liquefied natural gas (LNG), less than four years after their
launch, dashing the city-state's hopes of becoming Asia's main
pricing hub for the fuel.
    Sling - short for SGX LNG Index Group - indices will be
published until Oct. 31 this year, provided "there is sufficient
data for an accurate and robust index to be published", Energy
Market Company (EMC) said in an undated statement on its
website. 
    Sling was developed jointly by EMC, the market operator of
Singapore's wholesale electricity market, and Singapore Exchange
(SGX)  SGX.SI , and introduced in late 2015 in a bid to develop
Singapore as a price hub for the super-chilled fuel. EMC is a
wholly owned unit of Asian Gateway Investments, which is also a
SGX subsidiary.
    EMC will discontinue the Sling indices after low
participation over the past few years, an SGX spokeswoman told
Reuters in an emailed statement. SGX delisted the futures and
swaps settling on these indices with effect from July 29, the
spokeswoman added. 
    "LNG remains an important commodity for SGX. Following our
acquisition of the Baltic Exchange in 2016, we are refocusing
our efforts on the carriage of LNG as an internationally traded
seaborne commodity," she said, adding that the company will
shift efforts toward delivering indices for LNG shipping. 
    Through the Baltic Exchange, it has created a number of LNG
freight indices, the first of which was launched in March and it
plans to launch two more indices by the year-end, she said. 
    Sling comprise three indices - Singapore Sling, North Asia
Sling and Dubai/Kuwait/India Sling. 
    It was not immediately clear if any contracts are currently
using the Sling indices as pricing reference.
    "While SGX has been keen to promote itself in the LNG
commodity space, it has faced competition from more established
pricing agencies and has failed to gain a foothold," said Chong
Zhi Xin, associate director of Southeast Asia Power, Gas, Coal
and Renewables at research firm IHS Markit.  
    S&P Global Platts' Japan Korea Marker (JKM) in which
liquidity has been growing rapidly over the past two years is
fast becoming the main benchmark for spot cargoes in Asia and
appears to have nudged out competitors in the sector. 
    "On the path to commoditization, liquidity tends to
congregate around certain price markers. This was the case for
LNG as well, and the Sling was just not one of them," said
Edmund Siau, an LNG analyst at FGE. 
    The Sling spot index is the average of expert assessments
contributed by a portfolio of market participants including
producers, consumers and traders who are active in the physical
LNG market, according to EMC website.
    Singapore, Asia's main oil trading hub, has been expanding
its LNG infrastructure by increasing storage capacity and also
adding capabilities to bulk-break cargoes. 

 (Reporting by Jessica Jaganathan, Editing by Kenneth Maxwell
and Sherry Jacob-Phillips)
 ((Jessica.Jaganathan@thomsonreuters.com; +65 6870 3822; Reuters
Messaging: jessica.jaganathan.thomsonreuters.com@reuters.net;
Twitter: https://twitter.com/j3ssi3))
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