LNG prices on the rebound?

Platts said that in real terms this meant that the cost for delivery to Asia in October rose to an average of $12.826 per million British thermal units (/MMBtu).

The organisation said that this marked the first month-over-month increase in the Platts JKM since March 2014, triggered in large part by renewed buyer interest in October cargoes.

“There’s a clear contango into the traditionally stronger winter season in north east Asia and this has brought some buyers back into the market to purchase October spot cargoes ahead of an anticipated rebound of prices in November,” said Stephanie Wilson, managing editor, Asia LNG at Platts.

She pointed out moderate temperatures over the summer and lower than anticipated downstream energy demand, particularly in Japan and Korea, kept buyer’s inventories high, meaning appetite for cargoes among north east Asian buyers remained quite weak.

Platts said that the sustained uptrend in prices has been quite swift with spot LNG prices gaining more than 30% in value since the Platts JKM price bottom of $10.525/MMBtu in August for September delivery – the lowest price in three years.

It is worth noting though that the October Platts JKM was still down 15.8% in year-over-year comparisons and was the lowest monthly average for the month of October since 2010.

For this reason the strength of the rebound at this time remains questionable.