LNG

Japanese liquefied natural gas imports dropped again last month as storage increased and North Asian prices declined with thermal coal deliveries also plunging while nuclear plant usage is increasing.

Japanese liquefied natural gas deliveries declined by almost 10 percent last month even as close to record deliveries were made by Australia and thermal coal was the preferred fuel over LNG for power generation.

Japanese liquefied natural gas imports dropped almost 9 percent in March as cargoes increased from Russia and the US while shipments from the Middle East and Asia declined at the same time as Japan’s thermal coal deliveries skyrocketed by over 25 percent.

Japanese spot LNG prices for delivered cargoes in March dropped substantially from the previous month and the contracted prices almost halved, as well as being well down year on year.

Japanese spot LNG prices for delivered cargoes in March 2021 came to $9.30 per million British thermal units compared with $16.30 per MMBtu in February 2021.

The March 2021 contracted price for shipments to Japan averaged $6.60 per MMBtu versus $12.70 per MMBtu in February 2021 and $3.30 per MMBtu in March 2020, according to the data from the Japanese Ministry of Economy, Trade and Industry (METI).

The delivered spot price for Japan in March 2020 was not published as there had been too few deals registered.

The monthly spot cargo numbers come from the Ministry’s commerce division and are only issued if a minimum number of two trades are recorded.

These prices have been published by Japan since 2014 to bring more transparency to the market.

However, most Japanese LNG cargoes are still delivered on a long-term contract basis linked to crude oil and this price has increased in 2021.

It is currently at around $8.80 per MMBtu based on a North Sea Brent crude price of $63 per barrel.

“Delivery conditions of prices (prior to averaging) are all converted into the equivalent delivery ex-ship (DES) basis,” said the METI division.

“Prices are the simple average (rounded to the first decimal place) of all contract-based (or arrival-based) prices of spot LNG in Japan (not weighted averages),” it explained.

The Ministry surveys spot LNG cargoes bought by Japanese utilities and other importers, but excludes cargo-by-cargo deals linked to benchmarks such as the US natural gas Henry Hub.

Overall Japanese LNG imports, including long-term contract volumes, had soared by more than 21 percent in February, the latest figures available, backed by a doubling of US supplies and more cargoes from Asia and Russia as stocks were rebuilt after the high winter season usage.

The February 2021 shipments amounted to 8.06 million tonnes, 21.5 percent higher than in February 2020 when they had amounted to 6.64MT, according to the figures from the Ministry of Finance.

The shipments equalled the volume received in January 2021 of 8.06MT, or around 118 cargoes, which had been an increase of 7.3 percent on January 2020.

Annual shipments of LNG to the Japanese import network of 37 facilities came to 74.46MT in 2020, down 3.7 percent compared with the 77.32MT received in 2019.

LNG imports by the world’s largest buyer of the fuel have continued to drop in recent years. The 2019 total of 77.32MT was 6.7 percent lower than the 82.85MT logged in 2018.

The January and February 2021 shipments of 8.06MT were still short of the most recent record set in January 2017 of 8.30MT.

Japan’s shipments in February 2021 cost 408.22 billion yen ($3.73Bln), a surge of 15.9 percent on the 352.14Bln ($3.23Bln) spent in February 2020 when volumes were also less.

Japanese spot LNG prices for delivered cargoes in February soared to as high as $16.30 per million British thermal units, a total of $10.80 per MMBtu more than in the same month last year.

Japan’s liquefied natural gas imports jumped by 7.3 percent last month, backed by a more than doubling of US supplies, underpinned by cargoes from Australia and the spot market, while thermal coal shipments surge by almost 11 percent.