JKM LNG Averaged $17.33 Per mmBtu in June as Japan Gas Generation Fell 16%, Pushing All Asian Buyers to Coal

The Japan Korea Marker for spot LNG averaged $17.33 per million British thermal units in June, according to OilPrice.com data, leaving Asian buyers paying 70% above prices recorded before the Middle East conflict disrupted Strait of Hormuz shipping. Henry Hub natural gas futures gained 2.0% Thursday to $3.260 per mmBtu, per Rigzone market data, widening the gross spread between US gas and Asian LNG to $14.07 per mmBtu. European TTF gas strengthened 2.00% to 45.13 EUR per megawatt-hour Thursday, per Trading Economics, with the June average equating to $13.19 per mmBtu per OilPrice.com. LNG and pipeline gas markets are moving opposite to crude oil, which is heading for its fourth consecutive weekly loss as Hormuz crude flows resume.

Japan's Power Utilities Cut Gas and Switch to Coal

Japan's nine largest power utilities reduced gas-fired electricity generation by 16% in June compared to June a year earlier, producing 17.3 terawatt-hours, according to OilPrice.com. LNG import volumes for the quarter ending June fell 7% year-over-year. The companies have not individually detailed substitution decisions, but the economics are clear. At $17.33 per mmBtu for spot LNG, gas-fired generation runs at a substantial cost disadvantage against coal, whose Australian benchmark retreated 15% from an early-June peak. Japan's utilities are not alone in that calculation.

OilPrice.com reported July 3 that all Asian countries have shifted away from gas-fired generation “on affordability and availability grounds.” Utilities in South Korea, Taiwan, and India moved toward coal wherever their power systems allowed. US LNG shipments to Asia exceeded 50% of total US cargo destinations for the first time in two years, per OilPrice.com, as traders directed supply toward the premium market. The behavioral shift underscores a structural demand problem for spot LNG: prices are high enough to destroy the demand they depend on for sustained trade volumes.

Why LNG Stays Elevated While Crude Falls

Crude oil is declining as Hormuz reopens, but LNG prices have not followed the same path. The structural reason is supply composition. Crude tankers from Saudi Arabia and Gulf producers can transit the strait within days of reopening, as Saudi Aramco's movement of approximately 10 million barrels this week demonstrates. Qatar's LNG infrastructure, including gas processing facilities and liquefaction trains, requires far longer to return to full output. Qatar accounts for roughly a fifth of global LNG trade. A partial resumption of Hormuz crude flows does not produce equivalent LNG volume recovery on the same timeline.

European gas prices reflect the same supply lag. TTF rose to 45.13 EUR per megawatt-hour Thursday, up 2.00% on the day. The June average TTF equated to $13.19 per mmBtu, per OilPrice.com, still well above pre-conflict European gas norms. Both JKM and TTF suggest market participants do not expect rapid LNG supply restoration even as crude oil normalizes.

US LNG Exporters Capture the Spread

The JKM-Henry Hub spread is drawing US LNG cargo holders to redirect shipments eastward. The gross spread at June average JKM versus Thursday's Henry Hub stands at $14.07 per mmBtu. US LNG tolling at major export terminals runs $3 to $3.50 per mmBtu for third-party shippers. Trans-Pacific shipping costs add $1.50 to $2 per mmBtu, leaving net margin above Henry Hub spot of $8.50 to $9 per mmBtu for Asia-bound cargoes. US LNG export capacity runs 12 to 14 billion cubic feet per day, with more than half now directed to Asian markets, generating an estimated $55 to $65 million in daily net arbitrage value above Henry Hub spot for cargo holders.

That spread is the economic foundation beneath recent US LNG capacity investments. BlackRock-backed Delfin Midstream took a final investment decision last month on a 4.4 million tonne per year floating LNG terminal off Cameron Parish, Louisiana, targeting Asian buyers. Delfin's contracted capacity, roughly 0.58 billion cubic feet per day, would generate approximately $600 million per year in net LNG arbitrage value for its buyers above equivalent Henry Hub domestic pricing at current JKM spreads. The Delfin FID cleared even as crude oil prices were softening, since LNG pricing is driven by supply and demand dynamics that diverge from crude in ways 2026 has made plain.

Shell and Wood Mackenzie Diverge on the Outlook

Wood Mackenzie flagged last week that “the cheap Henry Hub gas era is ending,” per World Oil reporting, pointing to rising US LNG export capacity absorbing incremental domestic supply as the structural driver. Shell projected flat LNG trade volumes for 2026 during its latest market outlook, also per World Oil, a view that implies no near-term relief from current tight spot pricing. The two forecasts diverge on mechanism: Wood Mackenzie sees the Henry Hub floor rising regardless of the Hormuz outcome, while Shell's flat-volume projection implies demand destruction from high LNG prices offsets any new supply. Thursday's Henry Hub price of $3.260 per mmBtu, up 2.0% on the day, remains historically low by global standards. For 2026, the $14 JKM-Henry Hub spread continues to create strong financial incentives to move every available US LNG cargo toward Asia rather than domestic or European markets.