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May JKM LNG swap volumes hit new record 63 cargoes

JKM LNG swap volumes in May continued to gain for the third month in a row to hit another record month, at 18,992 lots or 63 cargoes, up 10.5% from April and nearly fivefold the number for the same month last year.

• May volumes up 10.5% on month at 18,992 lots
• Prompt August, Q3, Q4 trades lead market activity
• Cal 20, Cal 21 trades at 720 and 120 lots respectively

The summer months were the most actively traded, with August and Q3 JKM swaps seeing heavy activity throughout the month. August saw 3,615 lots or 12 cargoes change hands, with May 23 seeing the most activity at 845 lots traded.

At the same time, Q3 volumes hit 3,108 lots or 10.4 cargoes, with its most active day on May 9 at 555 lots traded.

Market sources said the brisk trade was largely driven by strong summer trade into the Pacific, which has seen the JKM gain around $1.50/MMBtu since the beginning of May.

But positions for winter also drew significant interest, with 3,072 lots of Q4 2018 traded over the same period, double the April volume.

The most active day of trade was May 10, with 2,478 lots of just over eight cargoes.

While the first half of the month saw slightly more activity than the second, the average daily volume for May was just over two cargoes.

Market participants said that while volumes were increasing sharply, the number and type of counterparties have remained largely unchanged. “There is a change in the mentality of the market and people are getting more involved,” a trading source said. “In that sense, liquidity breeds liquidity.”

Trading sources said around 40 counterparties were active in the JKM swaps market, but some said they did not expect that number to rise much further. “That is about as much as we are going to get, unless you see companies from the US or China and other end users,” a London-based trader said. “That isn’t going to limit liquidity though as current parties are more confident in the market and are doing more on JKM.”
Source: Platts

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