Southeast Asian LNG hits over 10-month low versus JKM on strong selling interest

The Southeast Asian LNG marker registered the widest discount to date versus the JKM, as strong selling interest after a period of high prices pressured prices lower.

Platts, part of S&P Global Commodity Insights, assessed the DES Southeast Asian marker for November at $13.625/MMBtu on Sept. 2, down 38.8 cents/MMBtu on the day.

In comparison, the JKM -- the benchmark price for delivering cargoes into Northeast Asia -- was assessed at $13.996/MMBtu on Sept. 2, down 22.4 cents/MMBtu.

This put the Southeast Asian marker at a 37.1 cents/MMBtu discount versus JKM -- the widest discount seen since the Southeast Asian marker’s assessment was launched on Oct. 23, 2023.

Weakness in the Southeast Asian market was further compounded by strong selling interest during the Platts Market on Close assessment process Sept. 2, with Aramco offering a cargo for delivery over Oct. 23-25 DES Thailand, resulting in spreads being assessed wider between JKM and Southeast Asia.

Analysts at Commodity Insights expect Thailand's LNG demand to decline in 2024 compared with last year. However, the gap could be small owing to the El Nino weather phenomenon, which has caused hotter and drier weather conditions, the analysts added. This has increased power demand and reduced electricity imports from Laos because of lower hydropower output.

The Southeast Asian region’s demand for spot LNG cargoes is seasonal, with the highest demand observed in the second quarter of the year where the region typically experiences the hottest months.

Imports into Southeast Asia -- Thailand, Singapore, Philippines and Vietnam -- stood at 1.6 million metric tons in August, down from the 2.01 MMt in July and the lowest monthly imports seen since January, according to data from Commodity Insights.

Total August imports were at 22 cargoes, with Thailand importing 13 cargoes followed by Singapore at eight cargoes and the Philippines at one cargo.

Vietnam has not imported any LNG cargoes since June.

Southeast Asia has imported 14.07 MMt of LNG so far in 2024, compared with the 11.51 MMt imported in 2023 and 8.88 MMt imported in 2022, over the same period, the data showed.