How does Platts assess JKM™?
JKM™ reflects the daily tradeable value of a spot LNG cargo at the given delivery period and location, based on trades, bids, offers and indications of tradeable value reported to S&P Global Platts pricing specialists.
Platts uses a Market-on-Close (MOC) assessment methodology. Since Q2 2018, companies began reporting firm and transparent bids, offers and trades in the Platts MOC process.
The MOC is a day-long process that ends at 4:30pm Singapore time—the timestamp for Platts LNG assessments in Asia.
During the process, Platts editors survey the market for information on bids, offers, trades as well as market fundamentals. In addition, Platts also publishes information from companies that report firm, named bids, offers and trades in the MOC assessment process. All the published information is considered in the day's assessment. Firm bids, offers that are open to the larger market, and any trades resulting from those bids and offers, take precedence in the assessment process.
Besides information published in the LNG MOC process, Platts editors also engage directly with producers, consumers, traders, brokers and shippers to gather price information. Platts publishes this information and uses it to assess intraday values, which serve as the reference point for any firm bids, offers and trades in the MOC process. The information gathered through market surveys is considered in the final assessment alongside bids, offers and trades reported in the MOC. The firm bids, offers that are open to the whole market, and trades resulting from that take precedence in the final assessment.
These inputs are published throughout the day, in real- time, in the form of "market heards", to allow Platts to test the information, which forms the basis of the assessment and for market participants to give feedback on those inputs.
Platts assessments normalize for a range of dimensions including timing/delivery dates, quantity, location, terms of trade and quality.
For more details, please refer to our LNG methodology and specifications guide.
Evolution of Platts JKM™ Price Assessment
S&P Global Platts launched the first daily LNG price assessment for cargoes trading in Asia – Platts JKM™ – in February 2009. As global supply and market participation grow, the uptick in spot trading liquidity has seen the Platts JKM™ being increasingly used as the basis for trades both in and outside Asia.
While the LNG market continues to be made up largely of legacy long-term contracts, there is a marked shift in recent years towards shorter-term and spot deals.
LNG spot transactions, where trades are concluded for delivery in the next three months from the transaction date, totalled over 1400 in 2018, or more than 25% of global trade volumes, according to a recent LNG industry report.
The industry is gradually moving towards more market-based pricing, linking short- and medium-term contracts to LNG-related price assessments; simultaneously, oil-related pricing – the main long-term contractual reference – is on the wane. This trend increases as LNG spot market activity grows, and participation in nearby trade expands.
As the traded volumes in the LNG market expands, so do the product's fundamentals start to become more visible in its pricing. Consequently, LNG prices are emerging as distinct from related hydrocarbon markets. Daily LNG spot prices transparently reflect the tradeable market value for LNG bought and sold each day.