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JKM hits record low amid Chinese demand uncertainty, weaker Eurogas

Singapore — North Asian spot LNG prices plunged to a historic low Monday, on weaker demand outlook from China and softer European gas prices.

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The S&P Global Platts JKM for March was assessed down 21.3 cents/MMBtu at $3.512/MMBtu Monday, the lowest since Platts started assessing JKM prices since February 2009.

JKM was last assessed lower on May 26, 2009 at $3.65/MBBtu, Platts data showed.

The outbreak of coronavirus in China has dampened market sentiment, with market sources hearing Chinese buyers delaying spot cargoes, re-selling some February and March cargoes and potentially delaying their term off-take.

"Everyone is taking a wait and see approach as we do not know yet how bad the situation is likely to get and how much [volume] would Chinese buyers be able to take this summer," a Singapore-based trader said.

Buyers remained on the sidelines as they expect further downside to prices going ahead and would be buying only on a hand-to-mouth basis, trade sources said.

"There is absolutely no reason to buy in a hurry in the current market. Every time I think market has stopped falling, it goes down further," a Japanese trader said.

With the ongoing concerns about prompt Chinese demand, there were reports of offers for February and early March delivery cargoes being marketed aggressively due to limited buyers.

During the Market on Close assessment process Monday, Shell offered at $3.55/MMBtu for March 5-7 delivery cargo with a GHV of 1,030-1,130 and volume of 3.2-3.4 TBtu. This was 35 cents/MMBtu lower than a similar offer by the same entity on Thursday.

BP, Trafigura, Vitol and Engie posted one bid each during the MOC whereas, Shell and Glencore offered one cargo each.

Further supporting the downtrend in spot LNG prices, front-month March TTF futures fell by about 6.50 cents/MMBtu on the day to $3.099/MMBtu at Asian close Monday.

In tenders, Ichthys LNG is likely to issue a tender later this week for March 17-19 loading cargo, market sources said.

Torrent Power's tender for delivery of four cargoes over April, June, October and December was heard awarded at $3.10-$3.15/MMBtu, $3.25/MMBtu, $3.80/MMBtu and $4.75/MMBtu, respectively. The tender was heard awarded to Petronas, Naturgy, Trafigura and Glencore, according to two sources, but this could not be widely corroborated.

Taking advantage of historic low prices, another Indian end-user, Arcelor Mittal Nippon Steel India (former Essar Steel), issued a tender seeking a forward strip of cargoes.

Arcelor Mittal Nippon Steel India issued a tender seeking 36 cargoes over 2021-2023 delivery, with one cargo to be delivered every month. The pricing basis for the tender is Henry Hub, Dated Brent or JKM. The tender closes February 5, with a two day validity.