Platts: Sep spot LNG prices to Asia show slight recovery

Prices of spot LNG to Asia averaged $8.007 per million British thermal units for September, according to latest Platts Japan/Korea Marker data for month-ahead delivery.

The figure reflects the daily Platts JKM assessed between July 16 and August 14, expressed as a monthly average.

At $8.007/MMBtu, the September monthly average price had reached its highest level since February 2015, when prices had averaged $9.911/MMBtu. Prices were largely supported by portfolio suppliers and traders still looking to optimize deliveries across the Atlantic and Asia Pacific basins, or backfill short positions for delivery in September.

The marker had also posted its largest month-over-month gain of the year so far, rising 8.3% from August, which had averaged $7.395/MMBtu, as prices rallied from $7.825/MMBtu to $8.20/MMBtu by mid-month, on the back of this firmer buying interest.

The bulk of spot deals were concluded between portfolio sellers and traders, with most looking to supply cargoes into numerous ongoing buy tenders in India and the Middle East.

“Emerging demand in the Atlantic basin provided some support to the JKM, while the narrow arbitrage between the JKM and UK onshore National Balancing Point NBP futures meant that suppliers remained keen to optimize their positions in both basins,” said Stephanie Wilson, managing editor of Asia LNG at Platts. “However, demand from end-users in northeast Asia remained very slow and sentiment took a bearish turn once shorts were filled, more supply was announced and Brent crude oil values dipped again.”

Prices trended down from the $8.20/MMBtu peak to $8.00/MMBtu by the close of the trading month as a result. This stimulated further demand from Indian importers, resulting in a spate of deals around the $8/MMBtu mark in the last trading week.

This is the seventh 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 for September-delivery was down 25.2%, the slowest decline of 2015 so far, with September 2015 average prices at $10.702/MMBtu.

Meanwhile, the price of possible competing fuel thermal coal also decreased 18.0% year over year, while fuel oil was also down 52.2% from the same month in 2014.


Image: Kogas