Natural Gas Surges 20% in a Month... Investors 'Target Niche' Despite Inflation Pressure

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Following crude oil, natural gas prices have surged sharply, increasing inflationary pressures, but investors are turning to commodity investments amid this trend. While the domestic stock market has continued to show sluggish performance this year, natural gas-related stocks have recorded steady gains since January, and natural gas ETNs, derivative-linked securities designed to track commodity returns, have also ranked first in returns.

According to the New York Mercantile Exchange (NYMEX) on the 30th, natural gas futures prices (as of the 27th local time) stood at $8.73 per MMBTU (million metric British thermal unit). Natural gas futures prices reached $8.99 on the 25th, marking the highest level in the past decade. Natural gas prices have more than tripled over the past year, showing a steep upward trend, especially surging over 20% just this month.

The rise in natural gas prices is attributed to Europe reducing its dependence on Russian natural gas. Russia accounts for 41% of Europe's natural gas supply, making it difficult to diversify import sources overnight. Additionally, the possibility of natural gas shortages during the peak cooling season in Q3 and the winter season has further driven prices up.

Consequently, domestic natural gas-related stocks have also been on the rise. SK Gas, Korea Gas Corporation, Daesung Industrial, and SH Energy & Chemical are representative examples. These stocks have been steadily climbing since the end of January, with some surging close to the upper price limit during issues such as the full-scale war between Russia and Ukraine.

Natural gas ETNs are also soaring. The returns of natural gas futures ETNs issued by domestic securities firms, including Shinhan Leverage Natural Gas Futures ETN, KB Natural Gas Futures ETN, Samsung Leverage Natural Gas Futures ETN B, and Daishin Natural Gas Futures ETN, have all exceeded 50%. It is understood that natural gas leverage ETN products have achieved returns exceeding 300% just this year.

Lee Min-jae, a researcher at NH Investment & Securities, analyzed, "Due to Russia's demand for ruble payments and supply-demand imbalances in the LNG market, the strong trend in natural gas prices is expected to continue," adding, "Therefore, the value of companies like Korea Gas Corporation is expected to rise."