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Platts JKM™ for July-delivered LNG plunged 41.3% from year ago on poor demand


Published Jun 17, 2015
Platts - LNG

Prices of spot liquefied natural gas (LNG) for July delivery to northeast Asia averaged $7.600 per million British thermal units (/MMBtu), according to the latest Platts Japan/Korea Marker (Platts JKM®) data for month-ahead delivery.

The figure reflects the daily JKM assessed published by Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references, between May 18 and June 15 expressed as a monthly average.

The marker, which gained 6.7% month over month, started the assessment period at $7.750/MMBtu, but weakened over the course of the month to be assessed at $7.300/MMBtu on June 15, even as Asian power utilities entered the traditionally high-demand summer season, when electricity generators have to cope with increased air conditioning use in the northern hemisphere. However, this was 41.3% lower than the same period last year.

“The July market started off very strongly due to production issues at Australia’s Northwest Shelf project that resulted in some sellers raising offers quite aggressively,” said Max Gostelow, Platts pricing analyst for Asia LNG. “However, the expected demand spike never did materialize, and it quickly became apparent that supply in the region still far outstripped demand, with projects in Malaysia, Indonesia, Papua New Guinea, Russia, and even Australia’s Darwin project, having surplus cargoes.”

While buyers in Taiwan and Japan entered the spot market to buy several cargoes, most of the demand for July delivery was focused on India, which was the premium market in the Asia Pacific basin. However, by the end of the month, Indian prices had fallen to $7.300/MMBtu, the same price as the JKM, on slower demand due to India's monsoon season, and declining prices in competing markets --such as the UK onshore National Balancing Point gas market. This marked the end of a recent trend that saw Indian prices consistently above the JKM since April 13.

Meanwhile, the price of possible competing fuel thermal coal was up 0.8% on a month-over-month basis, while fuel oil was down 0.6% month over month during the May 18 to June 15 assessment period.

Tags: Platts




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