Spot LNG prices tumble below $10/mmbtu

Vol 18, PW 9 (18 Dec 14) Midstream & Downstream

Three LNG cargoes are expected over the next 12 days at Dahej and Hazira as international spot LNG prices continue to fall in line with the crashing crude prices.

Reliance is expecting a cargo at Hazira, while Petronet-LNG and GAIL are bringing in cargoes at Dahej, all for below $11/mmbtu. Next month (January) prices could fall further to $9.50-9.80/mmbtu, unusual for one of the coldest months in winter, and the lowest DES prices have been in January since 2010, according to a Mumbai-based LNG analyst.

In October Singapore-based traders were forecasting a price range of $11.20-$11.50 for January 2015 deliveries. “But the fall in spot LNG prices has continued,” we hear.

Spot prices typically rise from November to February because of winter, says Asian market analyst. “But this time it is the other way around,” he says.

The Platts JKM (Japan Korea Marker) for January cargoes averaged $10.06/mmbtu over the November 17-December 15 assessment period, down 46.9% from last year. January JKM prices started at $10.65/mmbtu on November 17 but fell to $9.90/mmbtu on December 1.

Fresh price assessments in the first half of December say January deliveries will be around $9.60/mmbtu. Sluggish demand from major LNG importers Japan, South Korea, China and Thailand is the main reason for the fall in prices, he adds, as is the inexorable freefall in crude oil prices.

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