Platts JKM™ for June-delivered LNG fell 3.5% from previous month

Northeast Asian price down month over month, bucking seasonality demand trends

May 19, 2015, 04:45 ET from Platts

SINGAPORE, May 19, 2015 /PRNewswire/ -- Prices of spot liquefied natural gas (LNG) to northeast Asia averaged $7.12 per million British thermal units (/MMBtu) for June, according to latest Platts Japan/Korea Marker (Platts JKM™) data for month-ahead delivery.

The figure reflects the daily JKM assessed published by Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references, between April 16 and May 15 expressed as a monthly average.

The marker slid 3.5% month over month as demand from end-users remained slow even in the run up to the traditionally stronger summer season – a time when demand from electricity generators rises as air conditioning use increases in the northern hemisphere.

The JKM opened the trading month at $6.875/MMBtu, and climbed 15 cents before falling back as prices in alternative markets – such as the UK onshore National Balancing Point (NBP) values – fell.

Abundant availability from projects in Malaysia, Indonesia, Brunei and Nigeria was largely absorbed by traders and sellers who were looking to cover short positions in both the Atlantic and Asia Pacific basins.

This – coupled with a slew of buy tenders released by newer entrants to the market, a brief production outage at Australia's North West Shelf LNG facility and a rally in NBP values – stemmed the losses on JKM and began to reverse the downtrend.

The JKM closed at $7.425/MMBtu as a result, with the bulk of increase seen towards the end of the end of the assessment period. However, prices struggled to move beyond the $7.50/MMBtu mark in northeast Asia, as end-users were seen to be under no pressure to procure cargoes.

"The North West Shelf outage, coupled with an existing force majeure in Yemen LNG, didn't appear to have much of an impact on the end users," said Stephanie Wilson, managing editor of Asia LNG at Platts. "In fact, it may have actually provided some respite, as many market participants in Japan and South Korea are heard to be grappling with high inventories. Buyers appear to have ample term deliveries and have taken an opportunistic stance in their purchasing."    

This was particularly apparent in India, which remained the premium market in the Asia Pacific basin. Importers had released numerous tenders for June-delivery and retendered for prompt cargoes when they were unable to find prices that matched their expectations.

However, with NBP closer to $6.70/MMBtu by the end of the trading month, Indian buyers were forced to show higher bids in order to tempt cargoes over from the Atlantic. 

Meanwhile, the price of possible competing fuel thermal coal decreased 24.3% year over year, while fuel oil was up 16.9% month over month as crude oil rebounded.

Platts Spot JKM and Substitute Fuel Prices (Monthly Averages)




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The Platts JKM™ is an assessment of LNG prices for spot cargoes delivered to Japan and South Korea, based on the most recent trades and/or bids and offers from buyers and sellers in the open market prevailing at the close of the trading day. The monthly JKM assessments are month-ahead delivered prices and are an average of the daily JKM price assessments reported by Platts. The monthly reports on Asia LNG prices and market developments are typically published shortly after the 15th of each month.

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