Platts: Asian January spot LNG prices plummet

Prices of spot liquefied natural gas for January delivery to Asia plunged 46.9% year over year to average $10.062 per million British thermal units (/MMBtu), according to latest Platts Japan/Korea Marker data for month-ahead delivery.

The fall is the largest year-over-year reduction since Platts began assessing the JKM in February 2009.

“With buyers in northeast Asia still holding high inventories, demand for spot cargoes remained limited,” said Stephanie Wilson, managing editor of Asia LNG at Platts. “Even in India and China, numerous buyers could not take additional volume, despite the lower prices.”

At $10.062/MMBtu, the monthly average JKM for January delivery had reached levels not seen since the same period in 2011, when the January JKM averaged $9.639/MMBtu. In the years following the Fukushima disaster and the subsequent loss of nuclear power in Japan, January JKM monthly averages had been consistently above $15.00/MMBtu.

The marker dipped below $10/MMBtu for the first time since the week of the Fukushima disaster in March 2011. The JKM for January delivery bottomed at $9.90/MMBtu on assessment date December 1, before rebounding to end the month at $10.00/MMBtu.

The January average JKM had lost 19.4% in month-over-month comparisons as a result, as buyers waited on the sidelines for prices to bottom.

“The downward pressure eased towards the end of the month, meaning some portfolio sellers with positions in northeast Asia picked up spot cargoes to optimize their trading strategies,” Wilson added.  “Numerous supply tenders from Russia, Australia and Papua New Guinea were awarded predominately to sellers as a result, which provided some support to the spot price. Also stemming the reductions was news that the world’s single largest buyer of LNG, Korea Gas, had returned to the market for some spot cargoes, which could draw other buyers back into the market.”  

Meanwhile, the price of possible competing fuel thermal coal increased 2.0% month over month, while fuel oil fell 13.6% over the November 17 to December 15 assessment period.

Press Release; Image: Kogas