Tokyo Commodity Exchange launches LNG futures for price hedging
04/04/2022 09:32
TOKYO, April 4 (Reuters) - The Tokyo Commodity Exchange
(TOCOM) on Monday launched liquefied natural gas (LNG) futures
in a trial listing as growing volatility in the spot market
increases the need for power generators to hedge risk.
TOCOM, a unit of Japan Exchange Group Inc (JPX) 8697.T ,
also upgraded the status of its electricity futures on Monday to
a permanent listing from a trial listing.
"We want to offer opportunity for Japanese power generators
to fix their margins by hedging price fluctuation risk on both
the fuel purchase and the electricity sale sides," TOCOM general
manager Kosuke Araki told Reuters.
Price volatility has intensified since the Russia-Ukraine
conflict and associated Western sanctions directed at Moscow.
The trial listing for the yen-denominated LNG futures
contract based on the Japan-Korea-Marker (JKM) price for LNG
assessed by S&P Global Platts is set for three years.
The most active June contract on LNG (Platts JKM) Futures
hit an opening price of 4,200 yen ($34) per metric million
British thermal units (mmBtu) in early Monday trade, near Asian
spot LNG prices LNG-AS of $35 per mmBtu. urn:newsml:reuters.com:*:nL5N2VZ3J8
Only one trade was settled during the day session on Monday,
according to TOCOM's website.
"We hope major Japanese power generators and trading houses
participate in our LNG futures trading to help attract global
traders and suppliers to also join," TOCOM's Araki said.
The electricity futures were listed in September 2019 to
help power retailers to hedge price volatility risk after
liberalisation of the electricity retail market in 2016.
Trading volumes on the JEPX power wholesale market have
grown rapidly as prices have fluctuated sharply.
($1 = 122.6900 yen)
(Reporting by Yuka Obayashi
Editing by David Goodman
)
((Yuka.Obayashi@thomsonreuters.com; +813-4520-1265;))