The Platts Market on Close assessment process for LNG in Asia over the pricing period of the March JKM — running Jan. 16 to Feb. 14 — saw a steep hike in activity amid intensifying competition for cargoes moving between Europe and Northeast Asia.
During the period, the physical MOC reported a resurgence of 282 bids, offers, and trades, representing an almost 67% increase over the previous month.
Eight entities — BP, Shell, Jera GM, PetroChina, Marubeni, Total Energies, RWE and Vitol — reported trades for March shipments to be delivered into the Japan-Korea-Taiwan-China (JKTC) region, which equated to approximately 1.3 million mt of LNG cargoes.
Other market participants involved in the physical Platts MOC included ADNOC Trading, Aramco, Glencore, Hartree, Mercuria, SEFE and Uniper.
Notably, for deliveries to Thailand, RWE, ADNOC trading and PetroChina reported a total of 30 bids for March-delivery cargoes.
Of all bids, offers, and trades, almost 49% were priced against the JKM index during the March pricing period, reflecting an 18% decrease from the previous month, as the index traded within a larger range of $13.699-$17.123/MMBtu, compared with the narrower range of $13.275-$15.347/MMBtu in the prior month.
Supported by bullish global gas markets, Asian spot LNG prices trended upward throughout the March JKM pricing period, reaching a high of $17.123/MMBtu on Feb. 10, the highest level seen since Nov. 21, 2023.
The Platts-assessed JKM — the benchmark price reflecting LNG delivered to Northeast Asia — averaged $14.95/MMBtu for the March JKM pricing month, up 82.10 cents/MMBtu, or 5.8%, from the previous month.
As supply tightness in Europe persisted following the expiration of the five-year Russia-Ukraine transit agreement and rigid storage level requirements, sellers were prompted to divert US cargoes to Europe, where profit margins have been more favorable than those available in Asia.
Traders found little incentive to pull US-sourced cargoes into the Far East as Platts assessed the East-West arbitrage — via the Cape of Good Hope — at minus $1.201/MMBtu on Feb. 14, indicating that arbitrage opportunities were presently closed.
Prompted by the diversion of cargoes westward, the Asian market demonstrated strong bidding activity on the physical MOC to secure cargoes, significantly influencing the upward pressure on JKM prices.
The average cash differential for the 85 bids, offers, and trades linked to the JKM balance-month next-day contract was reported at minus 2.10 cents/MMBtu, compared with the deeper discounted cash differential observed during the February JKM pricing period at minus 7 cents/MMBtu.
Fundamentally, market sentiment in Northeast Asia remained muted amid weak buying interest due to sufficient inventory levels and high spot prices, resulting in fewer spot trades in the JKTC region.
The Asian LNG market continues to monitor the impact of the US-China trade dispute, under which China has imposed a 15% tariff on US-origin LNG in retaliation to the the US’ 10% import tariffs on Chinese goods effective Feb. 4.
While the arbitrage window for delivery of US cargoes to Northeast Asia remains firmly shut, market participants expect the development to further incentivize Chinese companies to swap out their US exposure for LNG cargoes from other origins.
Derivatives MOC
Meanwhile, the number of bids, offers, and trades reported during the derivatives Platts MOC assessment process in the pricing period of the March JKM totaled 1,570. The number of bids, offers, and trades reported for the March JKM 2025 contract totaled 301.
Activity reported for the JKM balance-month next day in the pricing period of the March JKM was up by 53%, with 630 bids, offers and trades.
Fourteen entities, namely ADNOC trading, BP, DARE, ExxonMobil, Freepoint, Glencore, Marubeni, Petrochina, SEFE, Shell, Trafigura, TotalEnergies, Unipec and Vitol reported a total of 281 trades for the April JKM and balance-month next-day derivatives of 250,000 MMBtu each during the March pricing period.
Reflecting the surge in market activity, the broader futures market in January hit a fresh record high compared with market activity in 2024, with LNG futures traded volumes cleared on financial exchanges totaling 137,082 lots, up by 109% month over month and up 41% year over year, according to exchange data, as of Jan. 31.
Over Feb. 3-14, the LNG futures traded volume on financial exchanges in February totaled 77,365 lots, according to exchange data. This is equivalent to about 14.9 million mt, or 234 cargoes.
Notably, JKM futures traded volume on ICE recorded a new high on Feb. 10, at 11,984 lots, shortly after it recorded a high of 11,178 lots on Feb. 5.
Source: Reuters