Prices of liquefied natural gas (LNG) for December delivery to Asia increased 11.5% from November to $17.689 per million British thermal units (/MMBtu), as North Asian buyers began to build inventories ahead of the peak winter months, according to the latest Platts Japan/Korea Marker (JKM) for month-ahead delivery.
The monthly average Platts JKM for delivery in December was assessed from October 15 to November 15.
The December-delivery price increase followed a 4.1% rise for the prior month, when the November-delivery price averaged $15.864/MMBtu.
On a year-over-year basis, the average December JKM was up 30.8% from the December 2012 average of $13.529/MMBtu and was the strongest year-over-year gain registered for 2013.
A steep price contango early this month for cargoes to be delivered in December enticed buyers from North East Asia back into the market by mid-month. The price spread between December and January prices narrowed, given that much of this demand was centered on cargoes delivered in late December.
“ As winter demand picked up in anticipation of lower temperatures across North Asia, prices rose ,” said Stephanie Wilson, managing editor of Asia LNG at Platts , a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references. “ Prices were further underpinned by strong Free-on-Board (FOB) offers from European resellers who were under no pressure to move volumes ahead of January .”
A lack of spare LNG supply from Asia-Pacific producers, coupled with rising winter demand from Japan and buyers across North Asia has created a tight supply situation in the spot market that has pushed prices higher for December.
“ There are questions in the marketplace whether buyers will be able to meet their incremental winter demand when their Annual Delivery Program contracts start in January, ” Wilson said.
Meanwhile, thermal coal and fuel oil – substitutes to LNG in the fueling of Asian utilities – both registered year-over-year price decreases for December delivery. But on a month-over-month basis, the two fuels were higher, up 5.7% and 1.1%, respectively, from November.
[mappress] LNG World News Staff, November 19, 2013