Platts JKM? for April-Delivered LNG Down 38.7% Year Over Year
Liquefied Natural Gas for April Delivery shows reduction of 16.5% on Month-Over-Month Basis
Saturday, March 19 2016 - 08:05 AM WIB
The figure reflects the daily JKM assessment published by Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets, between February 16 and March 15, expressed as a monthly average.
At $4.460/MMBtu, the April JKM was 38.7% below prices for the same delivery month in 2015. Platts historical data shows the JKM for April delivery is also at the lowest monthly-average level seen since July 2009, when the monthly-average for August-delivered cargoes was $4.226/MMBtu.
Sentiment for April and further out in May continued to remain bearish due to expectations of extra supplies from both new and recently commissioned projects in the United States and Australia, as well as additional volumes from the Angola LNG project starting in the second quarter of 2016.
The JKM had begun the trading month at $4.70/MMBtu, before sliding to an intra-month low of $4.25/MMBtu in the first half of the month. Expectations of oversupply from the projects coming online weighed on the market sentiment.
However, the downward pressure on prices was short-lived, as demand for April cargoes emerged at the same time from several buyers looking to quickly fill their April positions. Buy tenders from Argentina, PTT, SK, Posco, GSPC, Gail, and IOC for prompt April cargoes reversed the downward trend in prices. The Platts JKM rebounded back up to $4.60/MMBtu by March 11.
Max Gostelow, Platts pricing analyst of Asia LNG: "While there are still valid concerns that 2016 will be an oversupplied market for most of the year, it's evident that if buyers all adopt the same attitude and all wait for prices to bottom out before entering the market to buy cargoes, then we could definitely see more volatility in the markets like what has happened in early March. However, the price recovery has stalled as the market expects sellers who had bid unsuccessfully into Argentina's 15-cargo tender to make those volumes available to the spot market. We are also noticing that the Qataris are growing increasingly competitive on price due to their long position, and offering very good price for volumes delivered to their term buyers."
The price of fuel oil, a possible competing fuel, decreased 53.6% year over year, while thermal coal was down 24.8% from the same month in 2015.
| Platts Spot JKM and Substitute Fuel Prices (Monthly Averages) | |||||
| Apr-16 | Apr-15 | Mar-16 | Year-On-Year Change % | Month-On-Month Change % | |
| JKM ($/MMBtu) | 4.460 | 7.279 | 5.339 | -38.7 | -16.5 |
| Qinhuangdao coal ($/MMBtu) | 2.558 | 3.403 | 2.503 | -24.8 | 2.2 |
| 180 CST fuel oil ($/MMBtu) | 4.193 | 9.039 | 3.881 | -53.6 | 8.0 |
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.
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. (ends)