Asia LNG physical MOC activity weakens for Feb JKM on holiday season, surplus inventory

The Asia LNG physical Market on Close assessment process for the February JKM pricing period -- Dec. 16-Jan. 15 -- saw a decline in activity as trading houses and portfolio companies reduced operations during the holiday season and muted buying interest amid sufficient inventories.

The physical MOC during the pricing period of JKM February saw 14 entities report 169 bids, offers and trades, down 53.95% month over month

Five entities, Shell, Vitol, Marubeni, CNOOC and Uniper, reported three trades for January and February shipments to be delivered into the Japan-Korea-Taiwan-China region. This is equivalent to about 195,000 mt of LNG cargoes.

Other market participants who participated in the physical Platts MOC assessment process include DGI, Engie, Glencore, PetroChina, Total Energies, Trafigura, ENBW, Freepoint and Mercuria.

Traders indexed 66.9% of all bids, offers and trades against Platts JKM as the pricing basis as they sought to hedge against the continued stable liquidity observed in the futures market.

The average cash differentials of all bids and offers reported in the pricing period of JKM February was marked at a 7 cents/MMBtu discount against the balance-month next-day contract, according to S&P Global Commodity Insights data. In contrast, the average cash differentials of all bids and offers reported in the pricing period of JKM January averaged at parity against the balance-month next-day contract.

The Asian spot LNG prices during the JKM February pricing period were down by 5.03% from the previous pricing period as a surplus in inventory levels and a mild winter curbed buying interest.

Market sentiment in Northeast Asia remained weak despite entering the traditional winter peak season. High inventory levels, existing supply contracts, and elevated prices tapered buying interests among end-users, resulting in quiet market activity in the JKTC region.

The Platts JKM, the benchmark price reflecting LNG delivered to Northeast Asia, was down month over month, with the average JKM price in Dec. 16-Jan. 15 at $14.129/MMBtu.

Meanwhile, the number of bids, offers, and trades reported during the derivatives Platts MOC assessment process in the pricing period of JKM February totaled 1,130. The number of bids, offers, and trades reported for the February JKM 2025 contract totaled 286.

Activity reported for the JKM balance-month next day in the pricing period of JKM February was down by 22.8%, with 543 bids, offers and trades.

Nine entities, namely DARE, Shell, Unipec, Glencore, SEFE, Marubeni, PetroChina, Chevron and Trafigura, reported a total of 42 trades for the JKM March and balance-month next-day derivatives of 250,000 MMBtu each during the February pricing period.

The futures market in December was at its lowest of 2024, with LNG futures traded volumes cleared on financial exchanges totaling 49,404 lots, down by 46.16% month over month but up 10.48% year over year, according to exchange data.

Over Jan. 1-15, the LNG futures traded volume on financial exchanges in January totaled 41,395 lots, according to exchange data. This is equivalent to about 7.96 million mt, or 125 cargoes.