January JKM at lowest since 2010

Prices of spot LNG for delivery to northeast Asia averaged $7.397 per million British thermal units for January, according to Platts’ latest Japan/Korea Marker (JKM) data for month-ahead delivery.

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.

A slew of new supply tenders from Indonesia, Australia and the first US cargoes also added to availability, applying more downward pressure on prices.

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.

“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.“

The figure reflects the daily JKM assessment published by Platts between October 16 and November 15, expressed as a monthly average.

The marker fell 26.5 per cent 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.

The JKM was only a marginal 1.6 per cent 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.

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