Platts: Asia July LNG Spot Prices Drop

Prices of liquefied natural gas (LNG) for July delivery to Asia fell 0.6% to $14.485 per million British thermal units (/MMBtu), as spot demand remained scarce even as the region entered summer peak demand season, according to the latest monthly report on Platts Japan/Korea Marker (JKM) for month-ahead delivery. The monthly average of Platts JKM for delivery in July was assessed over the period of May 16 to June 14.

This decline followed a 5.8% drop in prices for June delivery and marked the fourth consecutive month-over-month drop in spot LNG prices. Spot demand showed little signs of recovering, as higher-than-average May temperatures in Japan and South Korea failed to draw buyers back to the market. Ample stockpiles and increased reliance on inventory from long-term contracts covered requirements and continued to suppress spot demand.

“As North Asia entered the summer strong-demand season, tightness of supply due to the closure of Norway’s Hammerfest LNG and a force majeure on gas supplies feeding into Nigeria’s Bonny terminal did little to buoy prices and buyers remained bearish on spot cargo prices,” said Sarah Cottle, global editorial director, power, for Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references. “Also, despite the warmer-than-average temperatures in Japan and Korea, buyers in those regions remained confident that pre-existing long-term supply contracts would cover the bulk of their summer requirements.”

On a year-over-year basis, the July Platts JKM was down 19.5% from the 2012 July-delivery level of $18.000/MMBtu.

The month-ahead spot prices were mixed for thermal coal and fuel oil, which Asian utilities can use as substitutes for LNG. Thermal coal prices dropped 0.1%, while fuel oil rose 0.5%, respectively, according the Platts’ latest month-over-month data for July.