Japanese LNG Prices Stay High

Spot prices in East Asia often soften in the summer period. But in summer 2018 this didn't happen. 

In contrast to trader Vitol's predictions earlier this year of a weaker market this summer, the global balance for LNG has remained relatively tight.

Prices for spot LNG imports for Japan contracted in August 2018 increased to a monthly average of $10.70/mn Btu, the ministry of economy, trade and industry (Meti) said September 11. That’s up from $10 in July, $9.30 in June and $8.20 in May (all per million Btu). Continuing strong demand from China – whose LNG imports increased by roughly half in 1H2018 - underpinned the Asian market. Overall gas/LNG imports to China during the first eight months of 2018 were up 35% year on year, according to recent data.

The contract price recorded by Meti for spot LNG imports to Japan in August last year was a mere $5.80/mn Btu. (Meti's prices are ‘delivered ex ship’ in Japan, or converted into a ‘DES’ equivalent)

Prices are expected to firm as this autumn progresses: trade sources last week assessed the market for spot cargoes to be delivered into east Asia in one to two months’ time in the $11.50-$12/mn Btu range.

Japan’s Meti also published September 11 official average arrivals-based prices each month for spot LNG cargoes. The latest figures show these eased slightly in August to $9.80/mn Btu, after peaking in July at $10.30/mn Btu for this summer.  Such values are also far higher than year ago the $5.60/mn Btu average reported for both June and July 2017.