Monthly average prices of liquefied natural gas (LNG) for October delivery to Asia fell 4.8% from September to $15.235 per million British thermal units (/MMBtu), as demand faded on cooler autumn temperatures, according to the latest monthly Platts Japan/Korea Marker (JKM) for month-ahead delivery. The monthly average Platts JKM for delivery in October was assessed from August 16 to September 13.

The price decline for October delivery followed a 3.5% price increase to $16.005/MMBtu for September delivery, breaking an infant two-month price uptrend.

On a year-over-year basis, the average October JKM was up 17.4% from the October 2012 average of $12.971/MMBtu, which was the lowest monthly JKM average during the calendar year.

Trading was thin in the traditionally slower shoulder month of October in North Asia, with moderate temperatures capping domestic demand. Shoulder months are the spring and autumn months, when energy demand tends to be at its lowest levels of the year. Sources told Platts that buyers with spare tank space had no urgent need to buy cargoes and were bargain-hunting.

“Term buyers were largely drawing on additional availability from Pacific projects, such as Malaysia's Bintulu LNG, Indonesia's Bontang LNG, Brunei LNG and Russia's Sakhalin 2 project,” said Sarah Cottle, global editorial director of power at Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references.

“This, coupled with ample spot supply in the Atlantic Basin, left price sentiment largely bearish,” Cottle said. “Also, the high cost of freight charters in the West widened the price spread between bids and offers, which limited spot trading.”

Meanwhile, thermal coal and fuel oil – also used to fuel Asian utilities and substitutes to LNG – registered year-over-year price declines for October delivery. But on a month-over-month basis, the fuels moved in opposite directions, thermal coal down 3.5% from September and fuel oil up 1.6% from September, according to Platts’ latest price data as assessed between August 16 to September 13.

Platts Spot JKM and Substitute Fuel Prices (Monthly Averages)* Oct-13 Oct-12 Sep-13 Year-On-Year Change % Month-On-Month Change % JKM ($/MMBtu) 15.235 12.971 16.005 17.4 -4.8 Qinhuangdao coal ($/MMBtu) 3.78 4.56 3.92 -17.0 -3.5 180 CST fuel oil ($/MMBtu) 16.02 17.59 15.77 -8.9 1.6 Source: Platts

*Referred to as month-ahead, the figures in the table are monthly averages of daily values assessed by Platts from August 16th to September 13th. The Platts JKM rolls on the 16th of each calendar month

The Platts JKM is an assessment of LNG prices for spot cargoes delivered to Japan and South Korea, based on the most recent trades and/or bids and offers from buyers and sellers in the open market prevailing at the close of the trading day. The monthly JKM assessments are month-ahead delivered prices and are an average of the daily JKM price assessments reported by Platts.

Tags: Platts