March sees record-high end-month open interest for JKM futures; CME activity surges

LNG trading activity soared in March, with end-month open interest reaching a record high for JKM monthly futures and balance-month next-day futures, according to data from several exchanges.

As of March 31, the total end-month open interest across the Intercontinental Exchange, the Chicago Mercantile Exchange, and the Tokyo Commodity Exchange hit an all-time high of 161,781 lots, surpassing the previous month's record of 149,411 lots.

On ICE, some 154,258 lots of open interest for JKM monthly futures were recorded, with 1,940 lots of open interest recorded for the JKM balance-month next-day futures. The CME and TOCOM saw end-month open interest for the JKM monthly futures standing at 5,580 lots and 3 lots respectively.

Meanwhile, the total traded volumes across the three exchanges amounted to 97,491 lots. On a year-on-year basis, the traded volume recorded in March was up by 18%, although this also represented a decline of just over 20% month on month.

This is equivalent to approximately 18.75 million mt, or 295 LNG cargoes, which is 7.9% higher than the North Asia total import volume of 17.38 million mt in March, according to Platts data.

On ICE, the traded volume for JKM monthly futures and JKM balance-month next-day futures reached 93,581 lots, with the monthly futures contributing 90,103 lots and the balance-month next-day futures adding 3,478 lots. TOCOM reported traded volumes totaling 10 lots, each representing 1,000 MMBtu.

Notably, CME saw a surge in activity for the JKM monthly futures, with traded volumes reaching 3,900 lots. This is a substantial increase compared with February, which saw both traded volumes and end-month open interest at 168 lots.

The trading activity was predominantly concentrated on the back of the curve for Calendar 2027-29, with a significant 69.2% of the total traded volumes occurring on March 26.

On March 26, the Calendar 2027-29 saw 75 lots traded per month. For open interest, Calendar 2027 saw 175 lots of open interest recorded per month, while Calendar 2028 saw 75 lots monthly. In contrast, Calendar 2029 saw more activity with 215 lots recorded each month.

A Singapore-based LNG trader attributed the heightened activity observed on CME to market participants managing exposure to both the JKM and Henry Hub indexes.

"It must be some of the US-based hedge funds, and those who have Henry Hub and JKM exposure, it is better to do the hedges on one exchange to get margin offsets," the trader said.

Meanwhile, trading activity for the JKM Average Price Options contract rose in March, with traded volumes at 2,175 lots, posting an 11% increase from February. End-month open interest stood at 10,215 lots as of March 31, inching up by 2.6% on the month.

The Platts JKM, the benchmark price for cargoes to be delivered into Northeast Asia, hovered around $12-$13/MMBtu throughout March.

The cargo market in the Northeast Asian region continued to exhibit bearish signals, with weak demand for spot cargoes, as the market transitioned into the shoulder season following peak winter period.

Recent spot Asian LNG prices were reported to be too high to stimulate demand from price-sensitive buyers, particularly in China, where the prices of pipeline gas and domestically trucked LNG remain more economical than JKM levels.

Additionally, Japanese companies were observed engaging in swap trades to capitalize on the contango structure between May and June, while outright purchases remained muted due to sufficient inventory levels, according to market sources.