Platts JKM, the benchmark price reflecting LNG delivered to Northeast Asia, is expected to stay firm during the week of July 14-18.

August JKM prices increased by 25.6 cents/MMBtu week over week to $12.758/MMBtu on July 11, supported by strong demand due to heatwaves in North Asia and the closure of the arbitrage window.

The DES Northwest Europe Marker (NWE) for August was assessed at $11.761/MMBtu on July 11, with the JKM/NWE spread at 99.7 cents/MMBtu.

While Asian traders are wrapping up August trades, the September market may see spillover demand from August, traders said.

The traders said the supply is limited because the arbitrage window from the US remains shut. US cargoes might start arriving in September due to higher Asian prices, according to the traders.

Northeast Asia
** In the week ending July 11, Asian spot LNG prices were firm as August JKM hit $12.942/MMBtu on July 10, the highest since June 25, due to higher consumption.

** The survey conducted by Japan’s Organization for Cross-Regional Coordination of Transmission Operators showed July 11 that Japan’s fuel inventory for power generation is expected to reach its minimum level on July 27, based on stock monitoring conducted by the OCCTO for the July 26-Sept. 11 period.

** Japan’s LNG stocks held by major power utilities dropped 7% week over week to a seven-week low of 2 million mt July 6, the Ministry of Economy, Trade and Industry said on July 9.

** South Korea, experiencing a heat wave, has also seen an increase in LNG demand, market sources said.

** South Korea’s Korea Southern Power Co, or Kospo, sought a cargo for the first half of September, with the tender closing on July 15.

** China remained quiet in the spot market because the current spot prices of $12/MMBtu were higher than domestic prices. Market participants in China were only heard optimizing their existing positions.

** Data from the platform affiliated with domestic gas distributor ENN Group showed that as of July 11, trucked LNG prices at China’s 106 LNG receiving terminals and inland natural gas liquefaction plants averaged Yuan 4,654/mt ($12.48/MMBtu).

** During the week of July 7-11, the Platts physical Markets on Close assessment process recorded 11 trades for DES JKTC for deliveries in August.

Southeast Asia
** Platts assessed the Southeast Asia Marker (SEAM) for August at $12.463/MMBtu on July 11, marking an increase of 26.3cents/MMBtu from a week earlier.

** The JKM/SEAM spread was stable at around 30 cents/MMBtu on July 11 from a week earlier.

** Demand from Thailand remained sluggish amid ongoing monsoon rains.

** Philippines’ First Gen closed a tender for 75,000 cu m for July 20-26 delivery on July 9. The award details were not known.

South Asia
** Platts assessed West India Marker (WIM) for August at $12.338/MMBtu on July 11, up 20 cents/MMBtu week over week.

** The JKM/WIM spread was recorded at 42 cents/MMBtu July 11, rising from 37.2 cents/MMBtu in the previous week.

** India’s BPCL awarded a tender for early September delivery at $12.3-$12.34/MMBtu. GAIL issued a tender for August delivery to Dabhol, but the tender was not awarded.

** Bangladesh awarded a cargo for mid-August delivery at $12.62/MMBtu with the tender closing on July 7. Bangladesh floated another tender for Aug. 4-5, Aug. 21-22, Aug. 28-29 deliveries, with the tender closing on July 13.

Derivatives

** The JKM September derivatives were valued at $12.620/MMBtu July 11, reflecting a positive cash differential of 13.8 cents/MMBtu for August delivery cargo.

** The JKM September derivatives rose 22 cents/MMBtu week over week as heatwaves across South Korea and Japan bolstered market sentiment, with incremental demand observed in South Korea. The cash differentials for August cargoes against the JKM September derivatives remained elevated in the mid-to-high teens throughout the week ending July 14.

** Market participants noted that the arbitrage window remained largely closed, with the East-West arbitrage for US-sourced cargoes via the Cape of Good Hope assessed at minus 38.4 cents /MMBtu on July 14.
** The closed arbitrage could also be observed in the Platts Market on Close assessment process in the week ending July 14, with only two out of 24 offers reporting a US base loading port.
Source: Platts