Benchmark LNG Japan/Korea Marker futures have tumbled 31% since the start of
the year as a milder-than-normal winter left buyers in Japan, South Korea and
China with brimming stockpiles and little need to dip into the spot market,
Bloomberg reported.
At the same time, a flurry of prompt supply, from Australia to Indonesia,
has kept the market well supplied.
Nearly all end-users have moved onto buying April cargoes, officially
marking the end of the winter peak-procurement season and dashing any bullish
hopes for a last-minute supply crunch.
Analysts at Wood Mackenzie see spot prices extending declines to bottom at
$5.80 per million British thermal units (mmBtu) in June before crawling back to
$7.40 by December.
“Warm weather has meant that Japanese and particularly South Korean storage
levels are still at very high levels,” said Nicholas Browne, an analyst at Wood
Mackenzie. Going forward, “we expect to see a decline in Japanese and South
Korean demand this year due to new coal capacity and restarting nuclear.”
Benchmark LNG Japan/Korea Marker futures for April delivery declined 3.1% on
Thursday to $6.25/mmBtu, the lowest for front-month prices since September
2017.
Recently in the physical market, Japan’s Tohoku Electric Power bought a
cargo on a delivered basis for April 1-5 at between $6.20 and $6.30/mmBtu. BP
sold to Gunvor Group on the Platts Market-on-Close trading window Thursday a
cargo for delivery to north Asia during April 15-17 at $6.20.
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