SINGAPORE/LONDON (Reuters) – The Japan-Korea-Marker (JKM) price for liquefied natural gas (LNG) assessed by S&P Global Platts fell to a record low of $1.938 per million British thermal units (mmBtu) on Thursday, Platts told Reuters.
The drop means that the JKM price is now almost at parity with the Henry Hub gas price NGc1 in the United States, discouraging spot cargo deliveries from the United States to Asia as the coronavirus pandemic dampens global gas demand in an already heavily oversupplied market.
“The major driver for the price drop in the last week has been a wave of supply tenders for May and June delivery. This has further flooded an already-underwater spot market,” said Ciaran Roe, head of LNG pricing at S&P Global Platts, adding that JKM hit a new low every day this week.
Earlier this week, British front-month gas contract TRGBNBPMc1 fell below the Henry Hub front-month futures for the first time in a decade, with the price of LNG delivery to Europe also below the U.S. gas price.
Buyers in Asia and Europe cancelled loading of around 20 LNG cargoes in June, trade sources said this week.
“While some supply may be taken out of the market via US cargo cancellations for June loading, that would only help balance the North Asia market for July deliveries,” Roe said.
The JKM price is increasingly becoming the benchmark for Asian spot cargoes. The price was assessed for June delivery on Thursday.
Reporting by Jessica Jaganathan in Singapore and Ekaterina Kravtsova in London; Editing by Toby Chopra and Elaine Hardcastle