Asia LNG MOC sees more activity in Jan on year amid peak winter demand

The Asia LNG physical and derivatives Platts Market on Close assessment process saw significant activity in January as trading across the peak heating demand season continued, according to S&P Global Commodity Insights data.

The physical MOC in January witnessed a total of 125 bids, offers and trades, compared with 25 in the same month last year.

A total of five trades were reported by five entities, namely BP, PetroChina, Shell, JERA GM and Glencore.

Around 320,000 mt of LNG physical cargoes were traded in January, compared with 65,000 mt a year ago, according to S&P Global data.

Most of the bids, offers and trades for physical cargoes on the MOC were priced on a floating basis -- 73 out of 125 (58.4%). Out of the 73, 40 bids, offers and trades were linked to the Platts JKM index.

The remaining 52 bids, offers, and trades for physical cargoes on the MOC were priced on a flat price basis.

The derivatives MOC in January saw 1,064 bids, offers and trades, compared with 56 across the same period last year.

A total of 41 trades of 250,000 MMBtu each were reported by 12 entities, namely Glencore, Vitol, Unipec, PetroChina, Shell, Gunvor, Dare, BP, Engie, Trafigura, Freepoint and Marubeni.

Some 389 bids, offers and trades of the JKM balance month-next day contract were reported compared to one reported bid for the balance month contract last January.

Thirty-one trades for the balance-month contract were done by nine entities, namely Marubeni, Shell, Vitol, Glencore, BP, PetroChina, Dare, Gunvor and Unipec.

A rise in trading activity was also observed in the futures market.

LNG futures traded volumes cleared on financial exchanges in January recorded 73,451 lots, up 75.5% month on month and 80.5% year on year, according to exchange and broker data.

Market participants were actively trading in both the Asian LNG MOC as well as the bilateral market amid the peak winter season, with many using the JKM benchmark in their physical and derivatives positions.

Traders also noted that the downward trend on Asian spot LNG prices may continue until spring due to comfortable inventories and mild weather.

Platts JKM was assessed at $9.716/MMBtu on Feb. 1. Platts is part of S&P Global.

Throughout the month, many traders remained uncertain with regards to the intermonth market structure between March and April as the physical market structure was observed to have shifted between contango and backwardation due to changing views and market conditions.