Asian spot LNG prices fell to their lowest December levels since 2010 as a build-up of uncommitted cargoes in the Pacific weighed heavily on the market amid weak economic sentiment.The continuing slump in the crude price, the authorisation of a first Japanese nuclear restart and the expectation of new plant start-ups extended the firm buyers' market conditions to the near curve.

The December East Asia Index (EAX) was last assessed on Friday at $11.094/MMBtu , marking a $3.269/MMBtu fall since it opened as the front month on 16 October. January '15 EAX fell by $3.725/MMBtu to $11.263/MMBtu over the same period, reflecting further headwinds for sellers expected in the new year.

The ICIS East Asia Index (EAX) is an arithmetic average of the DES (delivered ex-ship) front month and second month ahead assessments for Japan, South Korea, Taiwan and China. The index provides a measure of the commodity's value across the East Asia region and is a reliable LNG reference price for the region as it incorporates a wider pool of demand centres.

In the second half of October, sellers initially took confidence after Brent crude appeared to find support at the $86.00/bbl level after the recent heavy sell-off. On 16 October, a December DES cargo from the latest PNG LNG cargo was heard to have closed above $14.00/MMBtu while a deal for H2 January was understood to have been closed just below this level.

Demand from the usual winter sources remained muted as South Korea's KOGAS and most Japanese utilities reported they were unable to absorb further December cargoes. It was left to independent buyers in South Korea and China, as well as China's state oil companies, to provide some support to the market. As late as 21 October, the highest bid from an East Asian buyer was recorded at $14.00/MMBtu.
Source: ICIS