Prices of spot liquefied natural gas for December delivery to Asia plunged 29.4% year over year to average $12.490 per million British thermal units (/MMBtu), according to the latest Platts Japan/Korea Marker for month-ahead delivery.
At $12.49/MMBtu, the monthly average JKM for December delivery reached levels not seen since 2010, when the December JKM averaged $9.549/MMBtu. In the years following the Fukushima disaster and subsequent loss of nuclear power in Japan, December JKM monthly average prices had been consistently above $13.00/MMBtu.
The JKM lost $4.425/MMBtu over the assessment period, recording the most volatile month in the history of the marker. After beginning the month at $14.925/MMBtu on October 16, the December JKM closed at $10.50/MMBtu November 14, a new low for 2014, as sentiment became increasingly bearish.
“The recent uptick in prices lost momentum over the trading month, as the winter contango crunched. Sellers were less keen to take positions, and those holding them, particularly those with floating storage positions, began to undercut,” said Stephanie Wilson, managing editor of Asia LNG at Platts. “With inventories in Japan, South Korea and even India and China at high levels, many buyers have little appetite for incremental volumes and have taken to the sidelines of the market ahead of anticipated reductions.”
The December JKM showed a 13.4% month-over-month decline as a result, bucking the trend of recent years in the run-up to the traditionally stronger winter demand season.
Meanwhile, the price of possible competing fuel thermal coal increased 3.0% month over month, while fuel oil fell 13.4% over the October 16 to November 15 assessment period.