Platts JKM? LNG Prices for November Up 12.4% on Winter Demand
Despite month-over-month gains, uptrend appeared short-lived as inventories build up
Friday, October 17 2014 - 09:54 AM WIB
The marker moved up for the second month in a row, as buyers were drawn back into the market to purchase spot cargoes for the winter months, when demand has traditionally been higher. The data reflects the daily Platts JKM for November assessed between September 16 and October 15, expressed as a monthly average.
However, much of this uptrend was buoyed by portfolio sellers and traders who were seen buying cargoes to manage their positions or optimize cargoes originating from the Atlantic Basic.
In year-over-year comparisons, the average November LNG price was still 9.1% lower from the $15.864/MMBtu recorded in the same period last year, marking the eighth consecutive month of year-over-year declines.
"With six shipments available through tenders from Asian projects for November delivery, there was no shortage of volume to satisfy both end-user demand and backfill short positions," said Stephanie Wilson, managing editor of Asia LNG at Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references. "Some projects were unable to find buyers for all their offers."
The LNG prices had begun the trading month at $14.50/MMBtu, before peaking at $14.60/MMBtu on September 17, when it plateaued as portfolio traders and sellers looked to secure cargoes with bids that were higher than those from end-user buyers.
However, with underlying demand still fundamentally weak, the uptrend began to lose its momentum, reversing some of the gains. Market participants could not absorb all available spot cargoes that had originated from the Asia Pacific basin, creating downward pressure on prompt deliver cargoes that began to build towards the end of the month. As a result, LNG price for November delivery began to edge back by late September, and was assessed at $14.00/MMBtu on October 15.
"The bulk of demand from end-users was largely concentrated in the second half of November and they were able to wait for lower prices," said Wilson. "After a slew of deals for delivery in late November or early December, we began to see the JKM edging down. The pressure on the prompt cargoes appears to be spilling into the coming month, with prices in December now weakening, as buyers' inventories remain high."
Meanwhile, the price of possible competing fuel thermal coal increased 1.2% month over month, while fuel oil fell 6.9% over the September 16 to October 15 assessment period.
| Platts Spot JKM and Substitute Fuel Prices (Monthly Averages)** | |||||
| Nov-14 | Nov-13 | Oct-14 | Year-On-Year Change % |
Month-On-Month Change % |
|
| JKM ($/MMBtu) | 14.423 | 15.864 | 12.826 | -9.1 | 12.4 |
| Qinhuangdao coal ($/MMBtu) | 3.42 | 3.65 | 3.38 | -6.4 | 1.2 |
| 180 CST fuel oil ($/MMBtu) | 14.12 | 15.71 | 15.17 | -10.1 | -6.9 |
| **Referred to as month-ahead, the figures in the table are monthly averages of daily values assessed by Platts from September 16 to October 15. The 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)