Asian LNG derivatives trade surges on increased hedging

Expectations grow that a long-awaited Asian gas derivatives market is emerging

Structural changes to the physical market for liquefied natural gas – more buyers, more sellers and shorter, more flexible contracts – are creating an increased demand for hedging worldwide, say banks and brokers, triggering an appetite for Asia-based hedging instruments in particular. In the past 18 months, volumes of Asian LNG derivatives have increased six-fold, according to data from S&P Global Platts.

This is fuelling expectations that a long-awaited derivatives market for Asian LNG is