Prices of liquefied natural gas (LNG) for April delivery to Asia fell 6.7% to an average $18.113 per million British thermal units (/MMBtu) as the market finally began to cool off following recent historic highs, the latest Platts Japan/Korea Marker (JKM) for month-ahead delivery showed. The data reflects the daily Platts JKM for April assessed between February 16 and March 15 and expressed as a monthly average.

The Platts JKM for April was 2.7% higher than the April 2013 average of $17.636/MMBtu, therefore staying above the seasonal averages.

But prices slowly ebbed. The April JKM started the assessment period at $19.45/MMBtu and closed the period at $16.30/MMBtu. Within the month, the April JKM hit $19.50/MMBtu – the highest on record for April delivery – before dropping back $3.20/MMBtu on weaker demand from buyers in Asia and South America.

“The unexpected emergence of cargoes for prompt, late-March delivery from the Atlantic Basin put pressure on prices, which filtered into April pricing as the month wore on,” said Stephanie Wilson, managing editor of Asia LNG at Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references. “After concluding deals early in the month for April delivery, buyers in both Asia and South America had already wrapped up procurement and were in no rush to take more cargoes, particularly as price offers began to drop.”

“This, coupled with more reloaded cargoes on offer from Iberia and supply tenders from projects in the Atlantic and Asia-Pacific basins, led to an over-supplied market. Adding to price pressures was the fact that many of the winter buyers in northeast Asia were able to scale back requirements as the start of region’s slower-demand, spring season kicked in,” Wilson explained.

Meanwhile, prices of thermal coal and fuel oil – possible competing fuels to LNG – were also lower. On a month-over-month basis, thermal coal prices were down 6.2% for the February 16 to March 15 assessment period, while fuel oil prices were down 0.5%.

Platts Spot JKM and Substitute Fuel Prices (Monthly Averages)**
    Apr-14     Apr-13     Mar-14     Year-Over-Year Change %     Month-Over-Month Change %
JKM ($/MMBtu)     18.113    17.636    19.419    2.7    -6.7
Qinhuangdao Coal ($/MMBtu)     3.845    4.105    4.098    -6.3    -6.2
180 CST Fuel Oil ($/MMBtu)     15.691    16.420    15.769    -4.4    -0.5
Source: Platts