SINGAPORE, Dec. 17, 2015 /PRNewswire/ -- Prices of spot liquefied natural gas (LNG) for delivery to northeast Asia averaged $7.397 per million British thermal units (/MMBtu) for January, according to latest Platts Japan/Korea Marker (Platts JKM™) data for month-ahead delivery.
The figure reflects the daily JKM assessment published by Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references, between October 16 and November 15, expressed as a monthly average.
The marker fell 26.5% year over year, with thin buying interest dampening any price recovery, despite the fact that the market was now well into its traditionally stronger peak winter demand season.
At $7.397/MMBtu, the JKM for January delivery is at the lowest levels seen for the month since 2010, when the marker had averaged $7.145/MMBtu according to Platts' historical records.
The JKM was only a marginal 1.6% higher than the previous trading months' average of $7.280/MMBtu, with unseasonably warm temperatures and many ongoing tenders dampening spot activity.
The marker had begun the assessment period at $7.575/MMBtu, before trending down steadily to reach $7.175MMBtu by the end of November, as sellers were forced to reduce their offers in an oversupplied market in a bid to attract buying interest.
A slew of new supply tenders from Indonesia, Australia and the first US cargoes also added to availability, applying more downward pressure further along the curve and maintaining the backwardated* structure into February.
However, sentiment began to turn in early December, as the low price began to stimulate a demand response from buyers in India, the Middle East and Pakistan, with up to 13 cargoes sought between January and March.
Interest to purchase cargoes from Mexico also bolstered gains, with CFE awarding up to six cargoes on a JKM plus 10-40 cents/MMBtu basis for delivery over January to June. This pushed the JKM back up to $7.50/MMBtu, where it closed on December 15.
"The market began to tighten into January towards the end of the trading month, with awards from prompt tenders pushing beyond $7.50/MMBtu," said Stephanie Wilson, managing editor of Asia LNG at Platts. " Interest to purchase cargoes in Mexico also bolstered gains, with buyer CFE awarding up to six cargoes on a JKM plus 10-40 cents/MMBtu basis for delivery over January to June."
With prices of term-contract Japan Customs Cleared crude oil in Japan estimated at approximately $7-to $8/ MMBtu, calculated at a 14-14.85% indexation plus $1.00-1.25/MMBtu alpha, the possibility to secure January spot cargoes from Asia for delivery into term positions in northeast Asia was thin, leading to less appetite for optimization among sellers.
The price of fuel oil, a possible competing fuel, decreased 49.5% year over year, while thermal coal was down 31.9% from the same month in 2015.
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Platts Spot JKM and Substitute Fuel Prices (Monthly Averages)*
|
|
Jan-16
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Jan-15
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Nov-13
|
Year-On-Year
Change %
|
Month-On-Month
Change %
|
|
JKM ($/MMBtu)
|
7.397
|
10.062
|
7.280
|
-26.5
|
1.6
|
|
Qinhuangdao coal ($/MMBtu)
|
2.455
|
3.608
|
2.548
|
-31.9
|
-3.6
|
|
180 CST fuel oil ($/MMBtu)
|
5.339
|
10.573
|
6.156
|
-49.5
|
-13.3
|
Note: U.K. and U.S. front month futures roll at the end of each calendar month. Platts JKM rolls on the 16th of each calendar month.
Source: Platts data
The Platts JKM™ is an assessment of LNG prices for spot cargoes delivered to Japan and South Korea, based on the most recent trades and/or bids and offers from buyers and sellers in the open market prevailing at the close of the trading day. The monthly JKM assessments are month-ahead delivered prices and are an average of the daily JKM price assessments reported by Platts. The monthly reports on Asia LNG prices and market developments are typically published shortly after the 15th of each month.
Backwardation* is the industry vernacular for the condition whereby prices for nearby delivery are higher than prices for future-month delivery.
Media Contacts:
Global, Americas, Asia: Kathleen Tanzy, + 1 917 331 4607, kathleen.tanzy@platts.com
About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts' coverage of the biofuels, carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, shipping and sugar markets. A division of McGraw Hill Financial (NYSE: MHFI), Platts is based in London with more than 1000 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.
About McGraw Hill Financial: McGraw Hill Financial (NYSE: MHFI) is a leading financial intelligence company providing the global capital and commodity markets with independent benchmarks, credit ratings, portfolio and enterprise risk solutions, and analytics. The Company's iconic brands include Standard & Poor's Ratings Services, S&P Capital IQ and SNL, S&P Dow Jones Indices, Platts, CRISIL and J.D. Power. The Company has approximately 20,000 employees in 31 countries. Additional information is available at www.mhfi.com.
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SOURCE Platts
