Prices of spot LNG for January delivery to Asia averaged US$7.397 per million British thermal units, according to latest Platts Japan/Korea Marker data for month-ahead delivery.
The marker fell 26.5 percent 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.
At US$7.397/mmBtu, the JKM for January delivery is at the lowest levels seen for the month since 2010, when the marker had averaged US$7.145/mmBtu according to Platts.
The JKM was only a marginal 1.6 percent higher than the previous trading months’ average of US$7.280/MMBtu, with unseasonably warm temperatures and many ongoing tenders dampening spot activity.
The marker had begun the assessment period at US$7.575/mmBtu, before trending down steadily to reach US$7.175/mmBtu by the end of November, as sellers were forced to reduce their offers in an oversupplied market in a bid to attract buying interest.
A slew of new supply tenders from Indonesia, Australia and the first US cargoes also added to availability, applying more downward pressure further along the curve and maintaining the backwardated structure into February, Platts said.
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.
Interest to purchase cargoes from Mexico also bolstered gains, with CFE awarding up to six cargoes on a JKM plus 10-40 cents/mmBtu basis for delivery over January to June. This pushed the JKM back up to US$7.50/mmBtu, where it closed on December 15.
With prices of term-contract Japan Customs Cleared crude oil in Japan estimated at approximately US$7-to $8/mmBtu, the possibility to secure January spot cargoes from Asia for delivery into term positions in northeast Asia was thin, leading to less appetite for optimization among sellers.
The price of fuel oil, a possible competing fuel, decreased 49.5 percent year over year, while thermal coal was down 31.9 percent from the same month in 2015.