Prices of spot liquefied natural gas for November delivery to Asia increased 12.4% month over month to average $14.426 per MMBtu, according to the latest Platts Japan/Korea Marker for month-ahead delivery.
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. “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.”