SINGAPORE, Nov. 19, 2013 /PRNewswire/ -- Prices of liquefied natural gas (LNG) for December delivery to Asia increased 11.5% from November to $17.689 per million British thermal units (/MMBtu), as North Asian buyers began to build inventories ahead of the peak winter months, according to the latest Platts Japan/Korea Marker (JKM) for month-ahead delivery. The monthly average Platts JKM for delivery in December was assessed from October 15 to November 15.
The December-delivery price increase followed a 4.1% rise for the prior month, when the November-delivery price averaged $15.864/MMBtu.
On a year-over-year basis, the average December JKM was up 30.8% from the December 2012 average of $13.529/MMBtu and was the strongest year-over-year gain registered for 2013.
A steep price contango* early this month for cargoes to be delivered in December enticed buyers from North East Asia back into the market by mid-month. The price spread between December and January prices narrowed, given that much of this demand was centered on cargoes delivered in late December.
"As winter demand picked up in anticipation of lower temperatures across North Asia, prices rose," 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. "Prices were further underpinned by strong Free-on-Board (FOB) offers from European resellers who were under no pressure to move volumes ahead of January."
A lack of spare LNG supply from Asia-Pacific producers, coupled with rising winter demand from Japan and buyers across North Asia has created a tight supply situation in the spot market that has pushed prices higher for December.
"There are questions in the marketplace whether buyers will be able to meet their incremental winter demand when their Annual Delivery Program contracts start in January," Wilson said.
Meanwhile, thermal coal and fuel oil – substitutes to LNG in the fueling of Asian utilities – both registered year-over-year price decreases for December delivery. But on a month-over-month basis, the two fuels were higher, up 5.7% and 1.1%, respectively, from November.
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Platts Spot JKM and Substitute Fuel Prices (Monthly Averages)*
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Dec-13
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Dec-12
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Nov-13
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Year-On-Year
Change %
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Month-On-Month
Change %
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JKM ($/MMBtu)
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17.689
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13.529
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15.864
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30.8
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11.5
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Qinhuangdao coal ($/MMBtu)
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3.86
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4.35
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3.65
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-11.1
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5.7
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180 CST fuel oil ($/MMBtu)
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15.88
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16.27
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15.71
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-2.4
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1.1
|
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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
October 16th to November 15th. 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.
* Contango is the condition whereby prices for nearby delivery are lower than prices for future-month delivery
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SOURCE Platts