Japan LNG Prices Stay Stubbornly High

Spot LNG imports for Japan cbntracted in May 2018 fell to a monthly average of $8.20/mn Btu, the country's Ministry of Economy Trade and Industry (Meti) said June 12.

The monthly contracted value peaked this winter at $11/mn in January 2018, according to Meti, but eased to $9.10/mn Btu in April.

Nonetheless such values are much stronger than last year’s monthly contracted averages: $5.70/mn Btu in both April and May 2017 and $8.50/mn Btu in February 2017. Strong demand this winter from China, followed by a seven-week outage at PNG LNG, have supported the market to date in 2018. Meti's prices are ‘delivered ex ship’ in Japan, or else are converted into such a ‘DES’ equivalent.

Spot cargoes have since firmed in northeast Asia, with cargoes fixed earlier this month at an unseasonally high $9.50-$9.90/mn Btu for July deliveries, according to market reports (so not Meti).

Some of that price strength in Japan may ease. Expectations were raised at the weekend that more Japanese nuclear plants will be allowed back online sooner than expected, after the June 11 victory of Hideyo Hanazumi in the Niigata provincial governor election, an ally of the pro-nuclear Liberal Democratic-Komeito coalition government in Tokyo, reports the Japan Times newspaper.

Japan’s Meti also publishes official average arrivals-based prices each month for spot LNG cargoes. The latest such June 12 figures show these eased to $7.90/mn Btu in May 2018, from $8.80 in April, and a high average of $10.90/mn Btu in February 2018.  These too are much higher than year ago levels: such as $8.80/mn Btu in February 2017 and $5.70/mn Btu in May 2017.