South Korean summer demand surfaces as JKM falls below $12/MMBtu

South Korean private LNG importers have entered the spot market to meet potentially higher power demand this summer as the JKM price fell below $12/MMBtu.

The country has been experiencing rainy weather in recent weeks, with temperatures expected to rise following the rainy season, according to market sources.

"The power demand is expected to be stronger this summer," said one importer, showing that buyers need to seek additional cargoes for the peak summer season amid restocking demand.

Over the past two weeks, three importers had bought approximately five cargoes for August shipments. South Korean buyers were less active since May 16, when Platts JKM, the benchmark price reflecting LNG delivered to Northeast Asia, was at $10.979/MMBtu, according to S&P Global Commodity Insights data.

The recent purchases of August cargoes were primarily driven by price competitiveness, as JKM prices approached $12/MMBtu, slightly undercutting the wholesale gas prices of state-run Kogas, according to industry participants.

The Platts JKM for August was assessed at $11.673/MMBtu on July 10, marking a 2.7% week-on-week decline and a 12.6% drop from the highest price in 2024, which was $13.355/MMBtu on June 13. It was also a one-month low for the assessment, Commodity Insights data showed.

Another Asian trader noted that given the contango structure, it could be advantageous to replenish inventories with cheaper August and September cargoes, ensuring high inventory levels once summer concludes.

Meanwhile, Korea Midland Power Co., or Komipo, issued an invitation July 10 seeking a Sept. 26-27 cargo of 3.2-3.8 TBtu cargo on a DES basis with JKM linkage. The tender closes July 17.

Other South Korean buyers are monitoring prices for September cargoes. However, no firm bids had been heard in the market as buyers are cautious with spare inventory capacity and price volatility in JKM.

"As JKM trended to the mid-$11s/MMBtu range for August, LNG prices appear attractive on a flat price basis. However, buyers may aim for lower prices around $11/MMBtu or below for September cargoes, though demand for September is certain," said another trading source.