Platts Japan Korea Marker for July delivery lost 60 cents over the Asian trading week to close at $12.025/MMBtu, as sellers struggled to place the last few remaining cargoes for July delivery among buyers with limited demand.
Friday was the last day that the July JKM would be assessed as the front month, as the JKM is scheduled to roll over to August on Monday.
Offers were heard to have dropped from high-$12s/MMBtu on Monday to reach the low-$12s by Friday, with the number of offers drying up over the course of the week. Bids also trended lower, with levels heard anywhere between $11/MMBtu flat to mid-$11s/MMBtu based on buyers' requirement and firmness of demand.
As yet, no deal was heard to have been transacted below $12/MMBtu, with sellers reluctant to drop their offers any further.
However, at least two more cargoes were expected to be available in the Asia Pacific Basin for July delivery as part of tenders from Australia's North West Shelf and Russia's Sakhalin projects.
NWS had closed its tender offering a reported two-three cargoes over two loading windows on Monday 9 with validity to Friday 13. The project had offered either DES over July 28-30 and August 27-September 1 or FOB lifting between July 17-19 and August 16-21.
Elsewhere, Sakhalin was heard to have closed a tender June 10. The project was understood to be offering 3 cargoes for July-September delivery but likely to term offtakers and shareholders only.
A number of cargoes for June lifting were also still available from the Atlantic Basin, according to numerous sources, with sources of origination said to be Spain, Trinidad and Tobago and Nigeria. However, with the arbitrage firmly closed based on current FOB offers of $11.75-12/MMBtu, sellers would be forced to place cargoes into other markets or begin to lower offers.
Thailand's PTT was heard to have awarded its tender for two cargoes delivered July 3-10 and July 18-24. Both were understood to have been awarded below $13/MMBtu, with one delivery reportedly through a Japanese trader and another through an Asia-Pacific based seller. The buyer could have purchased a third cargo in the last week, but this was unconfirmed. For the bulk of industry participants, the focus had now shifted to August, where offers were slightly firmer at low to mid-$12/MMBtu, with bids anywhere between $11/MMBtu flat to high-$11s/MMBtu, widening the spread between buyers' and sellers' expectations.
Up to 10 cargoes were heard to be available from the Asia Pacific basin alone for August delivery, surpassing the potential demand for six to eight cargoes.
In addition to a potential four cargoes from Sakhalin and NWS tenders, volumes for August were heard to be available from Indonesia and Malaysia. The PNG project was also expected to provide between three and four cargoes for August delivery, predominately to long-term contract buyers, with prices expected to remain slightly below the market given the associated risks of delayed or non-loading.
Adding further pressure was the specter of oversupply from Kogas, which had reportedly placed between 10 and 14 cargoes with buyers in Taiwan, China and Japan until the end of July, but was still looking to swap in August. The state-owned buyer was heard to be considering chartering ships in order to store delivered volumes but this could not be confirmed.
Many felt that further pressure on prices could emerge as a result, with sellers in Indonesia and Malaysia heard to be marketing their cargoes in India. According to Platts data, India has only imported one cargo from 2013-14 from Asia-Pacific projects, highlighting how weak the current North Asian demand for the month is for sellers in Malaysia and Indonesia to look to West Asia.
The Platts DES West India Marker was unchanged at $11.35/MMBTu on Friday, after losing 55 cents/MMBtu over the course of the week. Offers to India were heard slightly above $12/MMBtu.
Looking further ahead, negotiations for winter cargoes have begun in Japan, although prices being offered were widely considered to be too high. Some suppliers are offering autumn and winter cargoes together in an attempt to tempt some buying interest for the shoulder season, an Asian trader said.
