Japanese LNG Prices Have Peaked: IEEJ

The average price of spot LNG imports to Japan contracted in January 2017 was $8.40/mn Btu, up from $8/mn Btu in December 2016, the ministry of economy, trade and industry (Meti) said February 9, their highest level for two years. But Japan's IEEJ says that prices have now peaked.

Meti said the average price of spot cargoes arriving in January 2017 (and therefore priced in previous months) was $7.30/mn Btu, compared with $6.80/mn Btu for the previous month’s arrivals. All its prices are on a delivered ex ship (DES) basis, and exclude cargoes indexed to Henry Hub or JKM.

Spot LNG prices for delivery to North Asia rose to two-year highs in late December of $9.50/mn Btu, their highest since early 2015, said the Institute for Energy Economics, Japan (IEEJ) in a briefing paper February 6. However by last month, IEEJ added that spot prices were trending downward as some buyers sought to offload cargoes and European hub prices softened. 

Japanese LNG import volumes and prices rocketed in record levels in 2013-14 to provide fuel for power generation, following closure of all the country’s reactors in March 2011. Of Japan’s 42 reactors, only two (Sendai-1 and Ikata-3) are commercially generating with a third, Sendai-2, expected to come out of scheduled maintenance later this month.

IEEJ said in December that 20 existing reactors and one new reactor were currently undergoing conformity testing, and expressed the hope that the nuclear regulator's assessment programme will be "even more streamlined... in  2017."

Meanwhile attempts to inspect the crippled Fukushima Daiichi reactor number 2 with a robot camera were frustrated this month when radiation destroyed the camera’s imaging system, reported Japanese broadcaster NHK. Six years after its meltdown, radiation levels are still high enough to kill a human within minutes, said the plant's operator Tokyo Electric.

Mark Smedley