Asian LNG buyers struggle as JKM soars above $40/mmBtu

Quantum Commodity Intelligence – A number of Asian LNG buyers have either cancelled or failed to award spot LNG tenders as prices become prohibitively expensive, raising the prospect of gas-to-oil switching, according to reports.  

Buyers including Pakistan, India and Thailand have all failed this week to secure spot LNG for Q3 and Q4 deliveries, as values soared to the highest level in over four months.

Asian LNG prices climbed above $43/mmBtu during the week, according to the Japan-Korea-Marker benchmark publisher S&P Global Platts, with prices soaring amid stiff competition from Europe, reduced US exports following the closure of the Freeport terminal and a heatwave across Asia boosting power generation demand.

The Platts JKM for August was assessed at $41.698/MMBtu 8 July, peaking this week at $43.574/MMBtu on 5 July, S&P Global said Friday.

JKM was assessed at a record $59.672 per mmBtu on 3 March this year, an oil equivalent of over $325/b.

A report published by S&P Global Platts Friday noted market participants said that the high JKM price was unsustainable and will likely result in demand destruction in Asia, as traders rethink portfolios and turn to other alternatives.

In a sign of evaporating demand, Thailand's PTT was widely reported to have canceled its buy tender seeking six cargoes for July to August delivery, with sources indicating that PTT will potentially look to gasoil instead to fulfil its requirements.

In India, GAIL was heard not to have awarded a 12-cargo swap tender for Dahej cargoes with Sabine Pass volumes for November 2022 to October 2023. A source with knowledge of the matter said the swap differential levels were not satisfactory to GAIL, but this could not be confirmed with the company.

Pakistan also failed to award its tender for ten Q3 cargoes, with local media reporting that no offers were received by Pakistan LNG Limited.