U.S. natural gas prices have surged, causing the revenue of inverse exchange-traded notes (ETNs) that track natural gas prices to plummet. With a severe cold wave hitting the U.S. and Europe, heating demand has increased, coupled with the Trump administration using liquefied natural gas (LNG) as a weapon in the tariff war.
According to the Korea Exchange on the 23rd, among the top 20 ETNs in revenue this month, 13 are products betting on the rise of natural gas futures prices. The 'Hana Bloomberg 2X Natural Gas Futures ETN (H)B' saw its share price rise sharply from 5,150 won at the end of last month to 9,515 won as of the 21st, an increase of 84.8%.
Inverse ETNs betting on the decline of natural gas futures prices recorded the lowest revenue this month. The 'Hanwha Bloomberg Inverse 2X Natural Gas Futures ETN' dropped from 36,530 won at the end of last month to 17,825 won on the 21st, a decline of 51.2%.
The 'Daeshin S&P Inverse 2X Natural Gas Futures ETN' and 'Hana Bloomberg -2X Natural Gas Futures ETN (H)' also fell by 51.1% and 50.6%, respectively, marking the second and third-largest declines.
Individual investors are purchasing inverse natural gas products in large numbers. It appears that expectations are influencing the belief that natural gas prices will be under downward pressure as temperatures rise in the short term.
So far this month, individuals have net bought 11.5 billion won of 'Hanwha Bloomberg Inverse 2X Natural Gas Futures ETN,' while the 'Daeshin S&P Inverse 2X Natural Gas Futures ETN' and 'Hana Bloomberg -2X Natural Gas Futures ETN (H)' saw net purchases of 1.6 billion won and 1.8 billion won, respectively.
The steep decline in revenue of inverse natural gas ETNs is attributed to a record cold wave that caused natural gas futures prices to soar. As the cold wave is predicted to peak in the eastern United States, there has been a rush in demand for natural gas. An increase in LNG exports from the U.S. has also contributed to the rising prices.
Choi Jin-young from DAISHIN SECURITIES Research Institute noted, "Looking at the seasonality of U.S. natural gas inventories, inventories, which have been decreasing until mid-February, will increase until mid-May. The natural gas futures traded starting at the end of February will inevitably reflect the inventory increase cycle for April. It is also a time to consider the implications of the La Niña-induced Arctic cold wave in terms of seasonality."