Prices of spot LNG for April delivery to Asia averaged $4.46 per MMBtu, according to latest Platts Japan/Korea Marker data for month-ahead delivery.
At $4.46/MMBtu, the April JKM was 38.7 percent below prices for the same delivery month in 2015.
Platts adds in its report that the latest marker for April delivery is also at the lowest monthly average level seen since July 2009, when the monthly average for August-delivered cargoes was $4.23/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 $4.7/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, Platts said.
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 of Platts said “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.”
He added, however, that 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,” Gostelow said.
The price of fuel oil, a possible competing fuel, decreased 53.6 percent year over year, while thermal coal was down 24.8 percent from the same month in 2015.