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Prices of liquefied natural gas (LNG) for January 2014 delivery to Asia increased 7.2% from December to $18.958 per million British thermal units (/MMBtu), as North Asian buyers continued to compete for winter cargoes, according to the latest Platts Japan/Korea Marker (JKM) for month-ahead delivery. The monthly average Platts JKM for delivery in January 2014 was assessed from November 18 to December 13.
The January-delivery price increase followed a 11.5% rise for the prior month, when the December-delivery price averaged $17.689/MMBtu.
On a year-over-year basis, the average January JKM was up 21.3% from the January 2013 average of $15.630/MMBtu.
“Aggressive procurement efforts from China’s buyers, who faced significant shortfalls in winter natural gas supplies, gave enough support for sellers to raise their offers and push deals into the $19/MMBtu level,” said Max Gostelow, associate editor of Asia LNG at Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references. “Following the China purchases for January, demand from buyers in Japan and South Korea buyers was much more subdued.”
Remaining buyers were reluctant to conclude deals above $19/MMBtu and cited several factors that suppressed demand: a combination of ample LNG supplies in tank, moderate temperatures in North Asia, and LNG prices already at or approaching oil parity. The apparent unsold number of Atlantic supplies remaining in the market also capped prices.
Given the limited demand from Asia at the end of the month, sellers began lowering their offers, which caused the daily JKM to dip back below the $19/MMBtu level.
Meanwhile, thermal coal and fuel oil – substitutes to LNG in the fueling of Asian utilities – were also mixed. Thermal coal on a month-on-month basis was up 13.5%, while fuel oil was 0.8% lower from December.
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Platts Spot JKM and Substitute Fuel Prices (Monthly Averages)* |
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Jan-14 |
Jan-13 |
Dec-13 |
Year-On-Year Change % |
Month-On-Month Change % |
|
JKM ($/MMBtu) |
18.958 |
15.630 |
17.689 |
21.3 |
7.2 |
|
Qinhuangdao coal ($/MMBtu) |
4.383 |
4.226 |
3.862 |
3.7 |
13.5 |
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180 CST fuel oil ($/MMBtu) |
15.755 |
15.936 |
15.881 |
-1.1 |
-0.8 |
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Source: Platts *Referred to as month-ahead, the figures in the table are monthly averages of daily values assessed by Platts from November 18th to December 13th. The Platts JKM rolls on the 16th of each calendar month |
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The Platts JKM is an assessment of LNG prices for spot cargoes delivered to Japan and South Korea, based on the most recent trades and/or bids and offers from buyers and sellers in the open market prevailing at the close of the trading day. The monthly JKM assessments are month-ahead delivered prices and are an average of the daily JKM price assessments reported by Platts.
For more information on natural gas or the methodology used by Platts in its power assessments, visit the Platts website www.platts.com.
Platts’ monthly reports on Asia LNG prices and market developments are typically published shortly after the 15th of each month.
