Spot LNG prices for December delivery rise 8.7% on Competing Demand

Prices of spot liquefied natural gas (LNG) for December delivery to northeast Asia averaged $7.280 per million British thermal units (/MMBtu) for December, up 8.7 per cent month on month according to the latest Platts Japan/Korea Marker (Platts JKM) data for month-ahead delivery.

However, on a year-over-year basis, December LNG prices plunged 41.7 per cent, Platts said.

The figure reflects the daily JKM as assessed and published by Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references. The December-delivery value reflects the daily JKM between 16 October 16 and 13 November and expressed as a monthly average.

The marker, which gained 8.7 per cent month over month, started the assessment period at $6.80/MMBtu. It steadily gained ground during the course of the month to close at $7.65/MMBtu on November 13, as new sources of demand emerged ahead of the winter heating season.

''Buyers in China, South Korea, Taiwan and Japan continued to show limited interest for incremental cargoes,'' said Max Gostelow, Platts pricing analyst of Asia LNG. ''Most buyers were heard to be grappling with high inventories following lower-than-predicted power demand. But demand from traders with short positions and strong demand from buyers in India, Pakistan and the Middle East, combined with a lack of available cargoes, resulted in upward price pressure on the spot market.''

Only a few buyers in North Asia entered the spot market to buy several cargoes. China's CNOOC launched its second sell tender from its equity position at Australia's QC LNG. Most of the end user demand for December was from South Asia and the Middle East, where LNG prices were trading at a discount to the Asia-Pacific basin. End users in India, Pakistan and Kuwait collectively tendered and/or launched expressions of interest for an estimated 14 cargoes for December-January delivery.

Meanwhile, the price of possible competing fuels -- thermal coal and fuel oil were down. Thermal coal was lower by 3.2 p[er cent on a month-on-month basis, while fuel oil was down by 0.8% month over month during the October 16 to November 13 assessment period.

Platts spot JKM and substitute fuel prices (monthly averages of daily values assessed by Platts from 16 October 13 November)*
Dec-15
Dec-14
Nov-15
Year-On-Year Change %
Month-On-Month Change %
JKM ($/MMBtu)
7.280
12.490
6.700
-41.7
8.7
Qinhuangdao coal ($/MMBtu)
2.548
3.524
2.633
-27.7
-3.2
180 CST fuel oil ($/MMBtu)
6.156
12.235
6.203
-49.7
-0.8

Source: Platts