Asian physical and derivatives LNG MOC sees record activity for June JKM

The Platts Market on Close assessment process for Asia's LNG physical and derivatives market observed a surge in activity during the June JKM pricing period, as market participants looked to optimize their portfolios during the shoulder season. Platts is part of S&P Global Commodity Insights.

The total number of bids, offers, and trades in the physical MOC reached a record high at 438 during the pricing period for June delivery cargoes, representing a 50% month over month increase and 116.83% year over year surge. The previous record of 388 was set during the April pricing period.

MOC activity was robust throughout the June pricing period, peaking at a daily record of 36 bids, offers, and trades on May 7. This peak followed strong activity levels of 34 orders on May 6 and 31 orders on May 2.

The 438 recorded bids, offers, and trades included 185 bids, 226 offers, and 27 trades for deliveries scheduled in late May, June, and July, involving 27 entities. Most of the bids, offers and trades were reported for delivery into the Japan-Korea-Taiwan-China (JKTC) region, with one reported for delivery into Japan and another for Thailand.

Out of the 438 bids, offers and trades for LNG cargoes, 274 were priced on a floating basis, while the remainder were on fixed-price basis. Among the index-linked orders, 264 were tied to the JKM full-month average or JKM balance-month contracts, while the remaining 10 were linked to the Dutch TTF index.

The majority of the JKM-linked bids and offers for May shipments were priced at a discount, averaging minus 1.8 cents/MMBtu to the balance-month next-day and minus 8.5 cents/MMBtu against the July JKM contract.

Notably, Qatar Energy Trading made its MOC debut on May 5, offering three cargoes. On May 15, Qatar Energy Trading and Tokyo Gas executed their first trade, with Tokyo Gas purchasing a June 26-28 delivery cargo from Qatar Energy Trading at JKM July minus 10 cents/MMBtu.

Prices under bearish pressure

The Platts JKM for June, the benchmark price for cargoes delivered into the Northeast Asian region, fell by 7.73% month over month to $11.498/MMBtu amid subdued demand from end-users during the shoulder season.

The shoulder season typically sees reduced demand for power generation, further diminishing spot cargo demand from end-users. Additionally, improved East-West arbitrage opportunities to Asia have decreased competition for spot cargoes, exerting bearish pressure on JKM prices.

Over half of the total offers, at 51.69%, reported on the physical MOC stated US base load ports. In comparison, only five out of 176 offers were observed during the May pricing period. This shift indicates an improvement in arbitrage opportunities into Northeast Asia for US-sourced cargoes.

However, the impact of trade tariffs imposed by the US and China on each other continued to affect trade flows, with sources noting that arbitrage into China remained closed.

Notably, Qatar Energy Trading reported two offers for loaded cargoes sourced from the Plaquemines LNG facility, scheduled for delivery on June 13-15, on May 8. Venture Global has sold LNG cargoes from its new Plaquemines terminal for the early months of 2025 through a short-term strip that was made available earlier in 2024, as reported by Platts.

These LNG sales, totaling approximately four to five cargoes per month on a free-on-board and delivered ex-ship basis, coincide with the commencement of LNG exports at Plaquemines in January 2025.

Derivatives

The derivatives Platts MOC process saw a record high of 1,946 bids, offers, and trades reported by 21 entities. This reflects a 23.87% month over month and a 76.75% year over year jump.

The derivatives MOC saw the previous high during the JKM December pricing month at 1,885 orders.

Of all bids, offers and trades, 45.43% were JKM July contracts, while 38.28% were Balmo-ND contracts.

A total of 412 trades for the June and Balmo-ND contracts of 250,000 MMBtu each were reported by 17 entities, including ADNOC Trading, BP, Chevron, Dare, DGI, Glencore, Gunvor, Marubeni, Mercuria, PetroChina, QatarEnergy Trading, SEFE, Shell, Trafigura, Unipec, and Vitol.

Notably, Vitol reported 149 trades on the derivatives MOC, while Shell reported 91 trades.

From April 16-May 15, LNG trading activity marked a third consecutive month of record-high end-month open interest in both JKM monthly futures and balance-month next-day futures, recording an all-time high of 166,309 lots.

LNG futures trading volumes cleared on financial exchanges reported 108,942 lots, equivalent to approximately 20.95 million mt, or 330 LNG cargoes.