Asia LNG MOC in July sees highest activity year to date

The total number of bids, offers and trades reported during the Asian physical and derivatives LNG Platts Market on Close assessment process in July reached a year-to-date high, S&P Global Commodity Insights data showed.

The physical MOC in July saw 282 bids, offers and trades, the highest recorded in 2024.

Eight entities — ADNOC Trading, BP, EnBW, ENN, PetroChina, Glencore, Shell and Vitol — reported 12 trades, equivalent to approximately 780,000 mt of LNG physical cargoes, for August, September and October shipments to be delivered into the Japan-Korea-Taiwan-China region.

Other market participants who participated in the physical Platts MOC included DGI, Jera GM, Itochu, Marubeni, Mercuria, PetroChina, RWE, SEFE, Six One Commodities, Trafigura, TotalEnergies and Uniper, with 101 offers and 169 bids reported.

Slightly more than half of all bids, offers and trades were reported using the Platts JKM index as the pricing basis, as traders sought to hedge with the continued stable liquidity observed in the futures market.

The average cash differentials of all bids and offers reported in July were marked at 8.2 cents/MMBtu discount to the September JKM contract and 8.9 cents/MMBtu discount against the balance-month next-day September contract, according to Commodity Insights data.

In contrast, the average cash differentials of all bids and offers reported in June were marked at parity to the August JKM contract and 3.9 cents/MMBtu premium against the balance-month next-day August contract.

Asian LNG spot prices in July hovered in the low $12/MMBtu level amid ample cargoes in the spot market and relatively thin demand.

The Platts JKM, the benchmark price reflecting LNG delivered to Northeast Asia, fell on the month, with the average JKM price in July at $12.158/MMBtu compared with $12.578/MMBtu in June.

Notably, a spike in power demand in early July prompted buying activity in Japan, amid intense hot weather depleting LNG inventories nationwide.

However, purchases by Japanese buyers were limited as Japanese utilities prepared stocks beforehand, according to market sources.

Traders also said other parts of Asia saw a lack of buying interest, with the Southeast and South Asian regions experiencing monsoon effects and price levels deterring Chinese importers.

On the supply side, concerns surfaced as the Freeport LNG facility was shut July 7, a day before Hurricane Beryl hit Texas.

Freeport LNG sustained damages to its fin fan air coolers in the hurricane and had its power knocked out, keeping feedgas deliveries close to zero for over a week. Feedgas demand has steadily increased since mid-July as Freeport completed repairs.

Sentiment also soured on the last day of July as geopolitical risks heightened after Israeli forces killed top Hamas leader Ismail Haniyeh in Iran, pushing the Platts JKM to a one-month high.

Meanwhile, arbitrage opportunities in July were sparse amid narrowed spreads between Europe and Asia’s spot LNG prices, providing traders with little opportunities to bring US cargoes to Asia.

Platts assessed the East-West arbitrage at minus 19.7 cents/MMBtu on Aug. 1, taking into account the H1 October JKM/H1 September NWE price spread against the US Gulf Coast to North Asia (via Cape of Good Hope)/Northwest Europe freight route costs.

The narrowed East-West arbitrage was also indicated by a drop in the number of offers that nominated US base load ports during the physical MOC, at 30 out of 101 (29.7%) offers in July. This compares with the 72 out of 141 (51.1%) offers in June when arbitrage opportunities were higher.

July derivatives MOC sees record activity in 2024
Bids, offers and trades reported during the derivatives Platts MOC in July reached a year-to-date high at 1,704, rising 5.97% month on month and more than tripling year on year.

A total of 150 trades for the JKM full-month derivatives and JKM balance-month derivatives of 250,000 MMBtu each were reported by 19 entities — ADNOC Trading, BP, Dare, DGI, Engie, Glencore, Gunvor, Jera GM, Marubeni, Macquarie, Mercuria, PetroChina, RWE, Shell, Six One Commodities, Total Energies, Trafigura, Unipec and Vitol.

The futures market at large was also relatively steady, with LNG futures traded volumes cleared on the Intercontinental Exchange in June totaling 68,536 lots, down 11.93% month on month and up 19.12% year on year. This is equivalent to approximately 13.18 million mt, or 208 cargoes.
Source: Platts