Bloomberg News

Japan Reduces Spot LNG Purchases as Prices Soar to Near a Record

July 04, 2012

Japan cut purchases of spot liquefied-natural-gas cargoes by 27 percent in May from a month earlier as prices soared to near a record amid the closing of domestic nuclear power plants.

Supplies for immediate and short-term delivery from the Atlantic Ocean area dropped to 847,624 metric tons in May from 1.16 million tons in April, according to calculations by Bloomberg based on data from the Ministry of Finance. Prices of spot LNG climbed to about $920 a ton, or $18.93 per million British thermal units, 16 percent higher than last year’s average. The fuel reached a record $25 in 2008.

Japan shut all 50 of its nuclear reactors for safety tests after last year’s earthquake and tsunami, halting atomic power generation for the first time in more than four decades. The country is restarting two units this month. Total LNG purchases in May rose 16.8 percent from a year earlier.

“Spot cargoes will start to moderate in the second half as Japan re-starts some of its nuclear facilities,” said Neil Beveridge, an analyst for Sanford C. Bernstein & Co., in Hong Kong in an e-mail on June 29.

Prices of LNG delivered into Japan including spot and term supplies declined by 0.6 percent from April to 70,916 yen ($889) a ton in May, equivalent to about to $18.30 per million Btu, as oil prices declined, according to the data.

The Japan Crude Cocktail, a basket of prices for oil imported into the country used to calculate LNG prices, fell to $124.56 a barrel in May from $126.96 in April, according to data compiled by Bloomberg. U.S. gas futures was at $2.909 per million Btu today and U.K. supplies were at $8.85 yesterday.

Nigerian Supplies

Spot and short-term supplies of LNG rose by about half from a year earlier while average costs at 73,424 yen a ton increased 36 percent, according to calculations based on the data.

Supplies from Nigeria fell 31 percent in May to 291,855 tons from a month earlier, and shipments from Equatorial Guinea declined by half to 129,490 tons, according to customs data.

Japan may reduce purchases of spot cargoes in July, according to initial estimates from ship-tracking data. The country may bring in at least six vessels carrying fuel from the Atlantic Ocean region and Yemen, down from nine a year earlier, according to the data from IHS Inc. (IHS:US) and the Ministry of Finance. Short-term imports reached a record 1.18 million tons in February.

Utilities increased thermal power output by 34 percent in May to compensate for the drop in nuclear generation, according to data released June 13 by the Federation of Electric Power Companies of Japan.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net


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