Total traded volumes in the JKM LNG derivatives market on the Intercontinental Exchange reached a multiyear high in the first quarter of 2024, according to exchange data.
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Register NowThe JKM LNG futures and JKM LNG balance-month next-day futures traded volumes cleared on the ICE in Q1 totaled 247,898 lots, equivalent to approximately 47.67 million mt, or 751 cargoes. This is the highest since Q3 2021, when it recorded 284,352 lots.
In the physical market, Japan-Korea-Taiwan-China, or JKTC, imported about 56.39 million mt, or 888 cargoes, in Q1, according to data by S&P Global Commodity Insights.
Meanwhile, the traded volumes cleared in March totaled 82,542 lots, down 10.07% on the month, but up 58.32% on the year. This is equivalent to approximately 15.87 million mt, or 250 cargoes, according to exchange data.
The open interest for the JKM LNG futures and balance-month next-day futures reached a 25-month high of 103,669 lots standing across the ICE as of March 28. This is the highest since February 2022, when it recorded 110,513 lots.
Some 102,894 lots of open interest for JKM LNG futures were recorded, along with 775 lots of open interest for the JKM LNG balance-month next-day futures.
The margin rate for the front-month May JKM contract was reported at $10,306, according to the ICE as of March 28.
March Platts JKM prices rise on supply uncertainties
Asia-Pacific spot LNG prices saw an uptrend in March, with traders attributing the bullishness to sentiment turning uncertain following various supply issues.
Platts JKM -- the benchmark price reflecting LNG delivered to Northeast Asia -- rose on the month, averaging $9.152/MMBtu in March, compared with $8.756/MMBtu in February.
Several market sources confirmed cargo delays at Gorgon LNG, Pluto LNG and North West Shelf LNG after tropical Cyclone Megan made its landfall March 18.
The outage at Freeport LNG was another supply concern, with Freeport starting upgrades to Train 1 and Train 2, which will keep production at the plant constrained until early May.
Amid these supply uncertainties, the East-West arbitrage throughout May provided traders with few opportunities to engage in interbasin trades in March, further tightening the supply of spot cargoes in Asia, according to an analysis of market data and industry feedback.
As of April 2, the arbitrage window between the US and Asia remained shut, with the H1 June JKM-H1 May Northwest Europe spread against the US Gulf Coast-to-North Asia/NWE freight rate marked at minus 35.6 cents/MMBtu, calculated based on the Cape of Good Hope route, data from S&P Global showed.
Demand for May cargoes remained largely stable, with one trader labeling bids in the market as "run-off-the-mill demand" rather than an incremental one.
Notably, Chinese importers remained on the sidelines for most of March as they awaited greater clarity on the prices of their 2024-25 pipeline gas sales contracts set by China's national oil and gas companies.
Chinese NOCs are expected to lower prices for their 2024-25 pipeline gas sales contracts, on the back of ample supply from both domestic production and imports, market participants said, to compete with falling spot LNG prices.
Across the derivatives curve, the intermonth contango structure between the May JKM and June JKM contracts in the first half of March gradually flipped into a backwardation structure in H2 March, with several traders attributing the backwardation to the strength in May prices.