Why JKM Matters in Global Energy Trading
The Japan Korea Marker (JKM) is the benchmark price for spot LNG (liquefied natural gas) delivered into Japan and South Korea, the two largest importers in Asia. It was created by Platts (S&P Global Commodity Insights) to reflect the daily cost of LNG cargoes traded in the region.
Over the past decade, JKM has evolved from a regional price assessment into a global benchmark, shaping LNG trade flows from the U.S. Gulf Coast to East Asia. It now sits alongside Henry Hub (U.S.) and TTF (Europe) as one of the three key gas benchmarks that set the direction of global gas prices.
Market Structure and Key Traded Products
Unlike pipeline gas hubs, JKM is a delivered price rather than a physical location. Platts surveys traders, importers, and LNG suppliers each day to estimate the price at which an LNG cargo would change hands for delivery in the next month to Japan or Korea.
Financial markets quickly adopted this physical assessment as a tradable reference. The most active contracts are:
- ICE JKM (Platts) Futures: the main financial product tracking the daily JKM assessment.
- JKM Swaps and Options: used by utilities, producers, and traders to hedge exposure.
- Freight-adjusted spreads such as JKM–TTF or JKM–Henry Hub, which price LNG flows between regions.
Liquidity has increased dramatically since 2021. Spot LNG volumes now represent over 30 % of global LNG trade, and daily JKM futures volume on ICE has grown more than fivefold in the past five years.
Price Drivers and Volatility Factors
JKM prices move with regional fundamentals but are increasingly tied to global factors.
Seasonal Demand
Asian demand peaks twice a year. During winter for heating and summer for air conditioning. These swings often trigger large price movements, especially when inventories are low.
Weather and Power Demand
Extreme cold snaps or heatwaves in Japan, Korea, or China can lift gas-fired power generation and push prices higher. Typhoons or monsoons that disrupt shipping can also delay deliveries, tightening supply.
Supply Disruptions
Unplanned maintenance or outages at LNG export terminals in Qatar, Australia, or the U.S. can send JKM soaring. Because LNG cargoes take weeks to reach Asia, supply shocks are felt quickly.
Shipping and Freight
LNG carriers are limited. When charter rates rise or the Panama Canal is congested, delivery costs climb, widening the price gap between regions.
Currency Effects
JKM is quoted in USD, but Japanese and Korean utilities pay in yen or won. A weaker domestic currency raises local fuel costs, dampening demand.
How LNG Pricing Works
LNG is natural gas that’s been cooled into liquid form for shipping. Exporters buy feedgas (usually priced off Henry Hub), liquefy it, load it on ships, and sell it to importers who pay a delivered price; JKM for Asia or TTF for Europe.
The profit margin, called the netback, equals the destination price minus feedgas cost, shipping, and liquefaction fees. When that margin is wide, exporters ramp up cargoes; when it’s narrow, exports slow.
The Three-Benchmark System
Henry Hub (U.S.) sets the feedgas cost for U.S. exporters.
TTF (Europe) and JKM (Asia) set the delivered prices where LNG competes for buyers.
Together they form a global triangle that directs every marginal LNG cargo.
How Prices Interact
When TTF > JKM, Europe attracts more LNG; Asia loses supply.
When JKM > TTF, Asia outbids Europe and pulls cargoes east.
When Henry Hub is low, exporters enjoy large margins, flooding the global market.
When Henry Hub rises, export margins shrink and shipments may slow.
The Role of Freight
Freight costs often decide which arbitrage is viable. Congestion at the Panama or Suez Canal, or rerouting due to geopolitical risk, can erase regional price differences.
Traders constantly monitor freight-adjusted spreads like JKM – TTF – HH to spot when routes open or close.
What Traders Watch
Professional LNG desks track two key spreads:
- JKM–TTF spread: shows which region is driving demand.
- JKM–HH spread: measures export profitability.
A widening JKM–TTF spread signals Asian strength and tighter global supply. A narrowing spread hints that cargoes are moving west. These metrics are tradable directly via ICE futures or indirectly through correlated gas benchmarks.
Trading JKM in Practice
For Hedgers
Utilities and importers hedge LNG procurement costs with JKM swaps.
Producers and exporters sell JKM futures to protect revenue from falling prices.
Portfolio traders link positions across JKM, TTF, and HH to neutralise regional exposure.
Example: a Korean utility expecting high winter demand might buy JKM December swaps to lock in cargo prices months ahead.
For Speculative Traders
Directional trades: Buy JKM when weather forecasts predict colder-than-normal winters; short after demand peaks.
Relative-value trades: Trade JKM–TTF spreads during shifting freight costs or policy shocks.
Volatility plays: Use JKM options around seasonal demand spikes or major LNG maintenance periods.
Technical Analysis Insights
JKM’s chart structure mirrors its fundamentals with long consolidations punctuated by violent seasonal rallies.
Because the Platts JKM is an assessment, we only get one value per day, not a candlestick with high intra-day volatility. This means that a lot of detail goes missing when analysing the JKM through the lens of classic TA.
Oscillators, volume and candle patterns as part of a mean-reverting strategy are of no use on the JKM. That’s why it is difficult to assess the most likely breakout direction during a prolonged sideways period. A break often comes as a surprise or on the back of fundamental news developments.
Once price breaks out of a range market, the initial validity and sustainability of the new momentum trade is difficult to assess.
However, JKM can still be analysed successfully. Once the market is trending, traders often keep a close eye on trend and momentum tools to constantly check for trend exhaustion.
How Clever Markets Helps Traders Master JKM
Clever Markets provides a complete analytical view of global gas benchmarks including JKM, TTF, and Henry Hub through its Energy TA Hub.
Clever Markets adds structure, consistency, and a shared language so you can turn intuition into a repeatable edge.
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