JKM prices continue to fall despite the earthquake in Japan

A 7.6-magnitude earthquake that struck western Japan continued to have little impact on natural gas demand and Asian gas prices on Wednesday.

After Monday’s earthquake, two coal-fired power plants in the Noto region were shut down and gas production was curtailed in the Noto region. The Naoetsu LNG import facility was also briefly closed but has since reopened. Kpler vessel tracking data showed on Wednesday that the offshore LNG vessel Ibri is ready to unload at Naoetsu with cargo from the Bintulu LNG facility in Malaysia.

Japan’s spot electricity price fell nearly 10% on Thursday as the country’s energy supply was at required levels. While the earthquake, which killed more than 50 people and injured hundreds more, could affect the regional electricity market, it is not expected to have any significant impact on the natural gas market.

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The Japan-Korea marker (JKM) spot price fell to $11/MMBtu on Wednesday, a five-month low. The flash JKM futures contract also gave up three cents to settle at $11.495/MMBtu on Tuesday.

Warm weather, strong inventories and lackluster demand among leading Asian buyers are keeping JKM prices under wraps.

Activity in the spot market has also been limited among larger Asian buyers who have so far relied on long-term contracted supplies to meet their needs this winter. Asian spot buying in recent weeks has been largely dominated by smaller buyers taking advantage of lower prices.

Japan imported just 17.48 million tonnes (Mt) of LNG in November and December, down from 19.04 Mt in the same period last year.

Authorities on Wednesday warned of heavy rains and landslides in the Noto region, but Monday’s quake did not hit markets like the massive 9.0 magnitude earthquake that shook Japan in 2011. That quake killed more than 18,000 people and destroyed Fukushima nuclear power plant in one of the world’s worst nuclear disasters.

The Fukushima disaster forced the shutdown or suspension of all nuclear facilities in the country and led to a huge increase in LNG imports into Japan, spurring further development in the global LNG market.

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