According to Price agency Platts, JKM LNG price has risen to record high, reports Reuters.
LNG at six-year high price
The Japan-Korea-Marker (JKM) price for liquefied natural gas (LNG) assessed by S&P Global Platts has risen to a record high of $20.705 per million British thermal units (mmBtu), the price agency said.
Asian spot LNG prices are riding at six-year highs, as a cold spell in some countries prompted record imports into the region.
What is the reason?
JERA, Japan’s biggest electricity generator and the world’s largest buyer of LNG, as well as other Japanese power generators, are competing with LNG buyers across northern Asia to secure supplies, sending prices higher.
This also means fewer cargoes are coming to Europe than is usual for the time of year.
Gas consumption & inventory draw-down
“A major demand stimulus for the recent price increase was the cold snap across northeast Asia which has boosted gas consumption and accelerated drastic inventory draw-down in Japan, South Korea and China,” S&P Global Platts said.
Depleted availability
On the supply-side, production issues in countries such as Malaysia have depleted availability and led to delayed or deferred deliveries of LNG, as well as reduced volumes stipulated under long-term contracts.
Constraints in the Panama Canal
Constraints in the Panama Canal have meant vessels carrying Atlantic supply have experienced longer shipping times into the Pacific region. This has meant more cargoes are expected in Asia in the later weeks of February or in March, the agency added.
Price expected to drop?
Platts said it forecast a drop in Asia Pacific demand through the first quarter. Even if some supply outages continue through March, prices could decline.
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Source: Reuters
