Multiyear low Platts JKM boosts February MOC activity in Asia-Pacific LNG

The Asia-Pacific LNG physical and derivatives trading saw sharp activity during the Platts Market on Close assessment process in February, when Platts JKM -- the benchmark price reflecting LNG delivered to Northeast Asia -- reached a multiyear low, data from S&P Global Commodity Insights showed.

The physical MOC in February saw 12 entities report a total of 103 bids, offers and trade, compared with four entities reporting 20 bids and offers in February 2023, according to S&P Global data.

The single trade reported in February saw Glencore buy a 3.3-3.6 Tbtu cargo from Unipec at JKM balance-month next-day plus 5 cents/MMBtu on Feb. 29.

Asia-Pacific spot LNG prices reached a multiyear low with the Platts JKM assessed at $7.981/MMBtu on Feb. 26, the lowest since April 15, 2021.

Record-low prices tempt buyers

Price-sensitive Asian buyers emerged amid record-low Platts JKM prices. The market saw Southeast Asian, South Asian and Chinese second-tier buyers issuing several buy tenders and procuring spot cargoes in the bilateral market.

The number of bids reported during the physical MOC also rose 20.51% on the month, indicating a rise in buying interest for spot cargoes.

Several LNG traders attributed the lack of offers during the MOC for delivery in the first half of April compared with H2 April to tighter supply conditions in the market.

"Many H1-April cargoes were already taken out by Chinese second-tier buyers, so there are not many cargoes left in the market," a Singapore-based trader said.

The majority of the bids, offers and trade were done on a floating-price basis, with traders using derivatives as a hedging tool amid declining flat prices.

A total of 67 out of 103, or 65.05%, of the reported bids, offers and trade for physical cargoes during the MOC were on a floating-price basis. Out of the 67, 62 were linked to the Platts JKM index.

The remaining 36 bids, offers and trade for physical cargoes during the MOC were on a flat-price basis.

Most of the JKM-linked bids and offers during the MOC for April shipments were priced at a premium to the April contract or balance-month next-day contract.

The average cash differentials of all bids, offers and trade that were priced against the April JKM contract and the balance-month next-day contract were reported at 4 cents/MMBtu and 9 cents/MMBtu, respectively, according to S&P Global data.

Improved activity in derivatives MOC

Meanwhile, the derivatives MOC in February saw 14 entities report 843 bids, offers and trades, compared with 147 bids, offers and trades reported in February 2023, S&P Global data showed.

A total of 76 trades, each 250,000 MMBtu, were reported by 12 entities -- BP, Chevron, Dare, DVTrading, Freepoint Commodities, Glencore, Gunvor, PetroChina, Shell, Trafigura, Unipec and Vitol.

The balance-month next-day contract continues to see significant activity during the MOC with a total of 335 reported bids, offers and trades, compared with one reported offer in February 2023.

A total of 29 trades for the balance-month next-day contract were done by seven entities -- BP, Dare, Glencore, Gunvor, PetroChina, Unipec and Vitol.

The derivatives MOC also saw a rise in activity for the JKM-WIM spread contract, with a total of six reported bids, offers and trade.

The single trade reported saw Vitol buying 25 lots of the spread contract from BP at 20 cents/MMBtu on Feb. 14.

The last time activity was reported for the JKM-WIM spread contract was in November 2023, with eight bids and offers.

The futures market at large also saw significant activity, with the total traded volumes reaching a multiyear high.

According to exchange data, LNG futures traded volumes cleared on financial exchanges in February rose 24.74% on the month, and surged 109.19% on the year, to 91,780 lots -- the highest since September 2021, when it recorded 96,506 lots.