Japan's spot cargoes still have price momentum

Tuesday, 16 March 2021
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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.

The delivered cargo prices for February 2020 had averaged $5.50 per MMBtu and in January 2021 had cost $15.50 per MMBtu, just $0.80 per MMBtu less than in February 2021.

The February 2021 contracted shipments to Japan cost an average $12.70 per MMBtu versus $3.40 per MMBtu in February 2020 and $18.50 per MMBtu in January 2021, according to the data from the Japanese Ministry of Economy, Trade and Industry (METI).

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 rapidly in 2021.

It is currently at around $9.85 per MMBtu based on a North Sea Brent crude price of $68 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.

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