LNG

Intercontinental Exchange, the leading global provider of energy trading platforms for futures and options, has announced a record third-quarter for the European benchmark Dutch Title Transfer Facility (TTF) with a record 18.7 million TTF futures and options traded.

Intercontinental Exchange, the leading global provider of energy trading platforms for futures and options, reported a record number of Dutch Title Transfer Facility (TFF) gas futures and options traded during May 2023 as the market tries to manage natural gas price risk exposure.

A record 5.7 million TTF futures and options were traded last month, which is the equivalent to a record 4,158 terawatt hours.

“Liquidity in ICE’s benchmark TTF market has grown strongly in 2023 with open interest up 37 percent year-over-year at 2.6 million contracts, the highest level since January 2022,” said Atlanta, Georgia-based ICE.

“In addition, ICE is seeing record market participation in its TTF futures and options markets, with hedging out to December 2031,” ICE said.

Analysts explained that the TTF global benchmark for natural gas and the futures market sends price signals which market participants rely on to manage their global natural gas price exposure as well as pricing the flow of natural gas in Europe.

Critical signals

“The success of the TTF derivatives market in sending these critical price signals has helped Europe balance supply and demand for natural gas, as well as identifying and clearing infrastructure bottlenecks that were created due to the changing flows of natural gas caused by the material reduction of gas flowing from Russia,” stated Gordon Bennett, Managing Director of Utility Markets at ICE.

According to ICE data, about 25 million TTF contracts have traded on ICE this year, up 17 percent year on year.

The firm noted that there was “particularly strong” activity in TTF Options where volume is up 179 percent and open interest has risen by up to 68 percent compared with 2022.

“Over one million TTF options were traded in the month of May, the second-highest volume month since TTF Options were launched on ICE Endex in 2013,” ICE said.

Open interest across ICE’s global natural gas portfolio is 31 million contracts on increase of 10 percent over last year.

The US firm offers a range of LNG market risk coverage including the US Henry Hub, the Platts Japan-Korea Marker LNG spot cargo price and UK National Balancing Point futures as well as the Platts West India Marker (WIM) and the Spark LNG Freight contracts.

Intercontinental Exchange, the leading global provider of trading platforms and clearing, posted record activity in September on the Dutch Title Transfer Facility (TTF) European benchmark with 5.5 million natural gas futures and options traded.

The popularity of the Dutch Title Transfer Facility (TTF) price for European natural gas and LNG values in the week that saw the price hit a 2021 high of $10.22 per million British thermal units has also led the Intercontinental Exchange to extend the forward curve for TTF futures to December 2031.

Intercontinental Exchange, the leading global provider of trading platforms and clearing, has posted record activity in two key LNG trading derivatives, the European benchmark Dutch Title Transfer Facility (TTF) and the Japan-Korea Marker for North Asian spot cargoes.

The UK, the second-largest LNG importer in Europe and with an average of around 45 percent of gas-fired usage for power, has hosted its first emissions auction organised by the Intercontinental Exchange, the leading operator of global energy derivative exchanges and clearing houses.

Intercontinental Exchange, the leading US operator of global exchange platforms and clearing houses, said the LNG freight futures contracts based on Spark Commodities price assessments had a successful launch with 30 lots traded on the first day.

The Intercontinental Exchange, the US-based operator of global trading platforms and clearing houses, plans to launch LNG freight futures contracts for the Atlantic and Pacific Basins, adding to a portfolio of sector offerings already including Japan-Korea Marker spot LNG cargo and Dutch Title Transfer Facility European benchmark derivatives.

ICE is introducing the new LNG freight futures contracts based on price assessments from Spark Commodities, a provider of technology-based solutions for promoting market liquidity.

Singapore-based Spark is backed by French data firm Kpler and EEX, part of the Deutsche Börse Group.

“These new contracts - called the Spark30S Atlantic and the Spark25S Pacific LNG Freight Future contracts - are traded and settled in US dollars per day,” explained ICE.

The numbers in the contract names indicate the number of days it takes an LNG carrier to complete a return voyage on the respective routes.

The settlement price of the contracts are based on the Spark30S (Atlantic) and Spark25S (Pacific) LNG freight spot price assessments.

“Market participants can use the contracts to manage price risk in respect of round-trip voyages between the US Gulf Coast and North West Europe (Spark30 assessment) and Australia and Japan, Korea, Taiwan and China (Spark25 assessment),” ICE explained.

Atlanta, Georgia-based ICE said it planned to start offering these cash-settled futures contracts on March 22, 2021, subject to regulatory approval.

ICE said the freight contracts would form part of its global natural gas complex as the market manages freight price risk alongside existing Dutch TTF, UK National Balancing Point, US Henry Hub, JKM LNG (Platts) and the West India Marker LNG futures contracts (WIM LNG - Platts).

“We have been in close engagement with the LNG market for more than two years about the right assessment on which to base LNG freight futures,” said Gordon Bennett, Managing Director of Utility Markets at ICE.

“During that time, LNG freight markets have become increasingly volatile, significantly increasing demand for suitable LNG freight risk management tools,” added Bennett.

“We believe that our freight futures contracts, priced against Spark’s assessment, will provide the hedging tools the market has been waiting for,” he declared.

ICE said the freight futures would trade and clear alongside the highly liquid and global gas benchmarks on ICE.

Tim Mendelssohn, Managing Director of ICE’s partner Spark, explained the aims of the new product.

“After a summer of LNG freight rates at record lows, this winter followed with the highest LNG freight rates ever assessed, peaking at $322,500/day on January 8, 2021,” said Mendelssohn.

“This volatility necessitates new risk management tools as well as future orientated, tech-driven price discovery platforms,” he stated. 

The Intercontinental Exchange, the US-based operator of global trading platforms and clearing houses, reported record activity across its markets for European Dutch Title Transfer Facility (TTF) futures and Japan-Korea Marker futures for North Asia spot cargoes.