PACIFIC LNG: Key market indicators for Sep 23-27

JKM prices fell 3.5% on the week Sept. 20, driven by the potential deal for Azerbaijan gas transmission via Ukraine to Europe, leading the market to anticipate active buying interest from price-sensitive Asian buyers in the week of Sept. 23.

Platts, part of S&P Global Commodity Insights, assessed November JKM at $12.912/MMBtu on Sept. 20, down 46.7 cents/MMBtu from the previous week. Meanwhile, Platts assessed DES Northwest Europe for October at $11.483/MMBtu Sept. 20, rising 7 cents/MMBtu on the week.

Northeast Asia

• JKM prices fell below the $13/MMBtu level over Sept. 20 as the market reacted to the potential Ukraine-Azerbaijan deal, although the final agreement has not been officially confirmed.
• South Korean and Chinese buyers continued to plan for winter procurement amid better economic margins and declining spot prices toward the end of the previous week edned Sept. 20.
• Japanese participants anticipate higher gas consumption due to the ongoing heatwave and boost in power supply facilities in the country.
• As of Sept. 20, the LNG East-West arbitrage was marginally closed, with Platts assessing the potential netback achievable for shipping an LNG cargo from the US to North Asia (via the Cape of Good Hope) compared with Northwest Europe at minus 8.7 cents/MMBtu, Commodity Insights data showed.

Southeast Asia

• Platts assessed the Southeast Asia marker at $12.588/MMBtu on Sept. 20, a decrease of 45 cents/MMBtu on the week.
• Demand in Southeast Asia began to pick up for the fourth quarter, as the Philippines' First Gen was awarded a tender for an October cargo, while Thailand's PTT secured a tender for a November cargo and issued another tender for two October cargoes in the previous week.
• The market anticipates a continued rise in Southeast Asian demand, as importers from the region respond to lower spot prices.
• Meanwhile, flash floods were reported in some areas in Thailand and Vietnam in the previous week due to Tropical Storm Soulik, which also led to damage in the electricity grid in the affected areas.

India

• Platts assessed the West India marker at $12.325/MMBtu on Sept. 20, a decrease of 12.5 cents/MMBtu on the week.
• Buying interest within South Asia picked up, as IOCL was awarded a tender for two cargoes for deliver over Oct-Nov at the $12.35-$12.50/MMBtu level.

Derivatives

• The JKM futures prices declined on the week, with the JKM November contract falling 82.4 cents/MMBtu to $12.85/MMBtu on Sept. 20, while the balance-month contract dropped 71 cents/MMBtu to $12.80/MMBtu.
• Traders saw greater opportunities to divert US-sourced cargoes into the Pacific basin, as the Platts-assessed LNG East-West arbitrage flipped to positive territory on Sept. 17 at 1.7 cent/MMBtu, Commodity Insights data showed.
• The East-West arbitrage window will be key as competition for spot cargoes intensifies between Europe and Asia as the market readies to exit the shoulder season. Several market participants highlight weather as the primary factor influencing demand levels for spot cargoes in both basins.