Platts: August LNG spot prices to Asia slide

Prices of spot liquefied natural gas for August delivery to Asia averaged $7.395 per million British thermal units, according to latest Platts Japan/Korea Marker data for month-ahead delivery.

The marker slid 2.7% month over month, with demand from end-users in northeast Asia extremely slow, despite the fact that August is traditionally the peak month of the summer buying season due to increased power generation.

“A slew of supply tenders from liquefaction projects in Asia largely capped the potential gains on the JKM early in the month,” said Platts’ Stephanie Wilson. “But traders and suppliers with short positions absorbed the bulk of these volumes.”

The August JKM opened the trading month at $7.20/MMBtu, the lowest level seen for August since 2010, before making the bulk of its 50 cent gain in the second half of the assessment period. This was largely driven by interest to either optimize or backfill short positions from traders and suppliers. This pushed the marker to close at $7.70.

This is the sixth consecutive month that JKM prices have been range bound between $7-8/MMBtu since declining from the $9-10/MMBtu level seen over January and February delivery.

Year over year, the JKM was down 34.9%, the slowest decline of 2015 so far, with August 2014 average prices at $11.365/MMBtu.

“New and existing buyers with emerging demand requirements in the Atlantic basin once again created opportunities for portfolio sellers and traders looking to optimize their deliveries by the end of the month, which pushed bids for the last few remaining cargoes higher,” said Wilson

Prices struggled to move beyond the $7.70/MMBtu mark in northeast Asia, however, as recent declines in the crude oil markets also provided a natural ceiling to prices.

Meanwhile, the price of possible competing fuel thermal coal also decreased 21.2% year over year, while fuel oil was also down 44.7% from the same month in 2014 as crude oil rebounded.

Image: Kogas