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Asia spot LNG: Platts Sep JKM sees largest on-month gain at $8.007/MMBtu

Singapore — The Platts JKM for September delivery averaged $8.007/MMBtu over the July 16-August 14 assessment period, up 8.3% from August, the highest month-on-month gain so far this year, on renewed buying interest and waning spot availability in Asia.

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At $8.007/MMBtu, the JKM posted its highest monthly average price since February, when it averaged $9.911/MMBtu. However, this is the seventh consecutive month that prices have been rangebound at $7-8/MMBtu since falling from the $9-10/MMBtu level seen over January-February.

Year on year, the JKM for September delivery was down 25.2%, the slowest decline so far this year, compared with the average price in September at $10.702/MMBtu.

September trading had opened at $7.825/MMBtu, before rallying to $8.20/MMBtu toward the middle of the assessment period as cargoes dried up following a spate of deals.


The bulk of these transactions were concluded between portfolio sellers and traders, most of then holding short positions into countries with ongoing buy tenders such as Pakistan, Egypt and Jordan.

Importers in India had also issued multiple tenders and expressions of interest for prompt cargoes, with deals for volumes originating from Australia and Papua New Guinea LNG concluded close to $8/MMBtu for late-August and September delivery.

This, coupled with emerging demand in the Atlantic Basin from South America and the Middle East, pushed up offers in northeast Asia to $8.30-8.50/MMBtu by the middle of the assessment month.

BEARISH SENTIMENT SETS IN

With northeast Asian end-user demand still tepid and Indian importers reluctant to transact above $8/MMBtu, the market appeared to have hit a ceiling.

Even concerns over supply from the Nigeria LNG project and above-average temperatures forecast in Japan could not halt the softening in the market, particularly as crude oil prices fell.

The marker took a bearish turn at the start of August, with more supply coming from various tenders in the Asia Pacific.

This exerted pressure on prices, particularly further out, bringing JKM values back to around $8/MMBtu.

Tangguh LNG had issued a tender on August 12 offering three DES cargoes loading over October 2-6, 10-14 and 17-24, sources said, adding that the bidding process was due to close by August 18.

The tender was open to selected parties only.

Indonesia's Donggi Senoro is also expected to offer up to two cargoes for September and three for October, but is yet to issue a tender. Sources expect it to do so in the next few days.

In Australia, BHP Billiton was heard to have issued a tender for an FOB cargo loading from the North West Shelf LNG facility in Western Australia over October 12-13.

The tender, which was restricted to select parties, was heard to have opened August 12 and closed August 17.

The facility was heard to have up to two more incremental cargoes available for October from Woodside and Mitsui, although some sources questioned whether Mitsui's volumes had been already placed.

In North Asian markets, Japanese utility buyer Tohoku had bought a cargo for mid-October delivery in the previous week as part of a closed tender, market sources said.

The cargo was bought around $8/MMBtu, although the origin and counterparty to the deal remained unclear.

A flurry of deals for September were seen in India toward the end of the trading month, with importer Gail buying between four and five cargoes for around $8/MMBtu.

Several sources said the bulk of the volume was likely to have originated in the Middle East but this was unconfirmed.

The JKM ended the trading month at $8/MMBtu flat, reflecting the trend.

ALTERNATIVE FUELS

On the UK National Balancing Point, front-month gas futures averaged $6.539/MMBtu over July 16-August 14, down 2.5% from the previous month's average of $6.792/MMBtu.

The JKM-NBP spread, however, widened to $1.48/MMBtu on an average, effectively opening the arbitrage window, although no spot cargoes were heard to be moving from West to East.

Elsewhere, front-month NYMEX Henry Hub gas futures averaged $2.821/MMBtu, down 27.4% year on year.

The Platts FOB Qinhuangdao coal price averaged $2.786/MMBtu over the same period, losing 2.1% from a month ago and down 18% year on year.

Meanwhile, Platts FOB Singapore 180 CST fuel oil saw a 15.8% decline from the previous month, averaging $7.354/MMBtu, down 52.5% year on year.

Note: UK and US front month futures roll at the end of each calendar month. JKM rolls on the 16th of each calendar month.
Source: Platts data

--Stephanie Wilson, stephanie.wilson@platts.com
--Edited by E Shailaja Nair, shailaja.nair@platts.com