Asia Spot LNG prices for March delivery hit highs on limited availability: Platts

At $19.419/MMBtu, the March 2014 JKM was up 1.5% from March 2013, when the monthly average price had reached $19.139/MMBtu.

February 19, 2014 8:53 IST | India Infoline News Service
Prices of liquefied natural gas (LNG) for March delivery to Asia gained 3.2% from February, averaging a record high $19.419 per million British thermal units (/MMBtu), as limited availability and competitive buying pressures supported prices, the latest Platts Japan/Korea Marker (JKM) for month-ahead delivery showed. The monthly average Platts JKM for delivery in March 2014 was assessed from January 16 to February 15.
At $19.419/MMBtu, the March 2014 JKM was up 1.5% from March 2013, when the monthly average price had reached $19.139/MMBtu. 
Tight supplies drove prices upwards across throughout the month, with March prices finishing at the all-time high of $20.20/MMBtu on February 14, surpassing the previous high of $19.85/MMBtu on February 15, 2013, also for March delivery. 
“Strong prices for February delivery -- coupled with the expectation that the LNG market would tip into backwardation by March -- meant that a number of northeast Asian buyers had already deferred their February demand into March,” said Stephanie Wilson, managing editor of Asia LNG at Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references. “This created more competition for cargoes at a time when the availability of free-on- board (FOB) cargoes and reload volumes were limited.”
Wilson said buyers, particularly in Japan, were then reluctant to close purchasing deals at such high prices as the month progressed. By price comparison, South America proved a tempting alternative market, further fuelling competition for the limited volume. “This enabled sellers to keep their offers above $20/MMBtu,” she said. 
Meanwhile, prices of thermal coal and fuel oil – substitutes to LNG in the fueling of Asian utilities – were slightly lower. Thermal coal on a month-over-month basis was down 8.4%, while fuel oil prices were 0.5% lower from February.

Platts Spot JKM and Substitute Fuel Prices (Monthly Averages)*
  Mar-14 Mar-13 Feb-14 Year-Over-Year Change % Month-Over-Month Change %
JKM ($/MMBtu) 19.419 19.139 18.808 1.5 3.2
Qinhuangdao coal ($/MMBtu) 4.098 4.170 4.473 -1.7 -8.4
180 CST fuel oil ($/MMBtu) 15.769 16.551 15.844 -4.7 -0.5
Source: Platts
*Referred to as month-ahead, the figures in the table are monthly averages of daily values assessed by Platts from January 16th to February 15th. The Platts JKM rolls on the 16th of each calendar month

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.

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