Bloomberg News

LNG Spot Prices Decline in Japan Along With Shipments in June

July 30, 2012

Spot prices for liquefied-natural- gas supplies to Japan dropped 2.2 percent in June from the previous month on lower demand and declining crude costs.

The cost of spot and short-term supply fell to 71,811 yen ($916) a metric ton for the month, according to data on the website of Japan’s Ministry of Finance. That’s equivalent to $18.85 per million British thermal units, 28 percent higher than last year’s average. Total shipments declined to 6.65 million tons in June from 6.9 million tons in May.

Prices of LNG imported into Japan are falling from a 41- month high in April because of a decline in oil prices and a gradual restart of shuttered nuclear facilities, reducing the need for LNG. Overall prices, including both short-term supplies and long-term contracts, rose to 70,944 yen ($906) a ton in June, up 17 percent from a year earlier.

“Brent peaked at $128 on March 13, and therefore I’d expect that to work through to high-priced June cargoes and then a decline in July and August,” said Tony Regan, a consultant with Singapore-based Tri-Zen International Ltd. He forecasts further declines until August.

The Japan Crude Cocktail, a basket of prices for oil imported into the country and used to calculate LNG prices, fell to $115.36 a barrel in June from $126.96 in April, according to data compiled by Bloomberg.

Fewer LNG Cargoes

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.

Japan shut all 50 of its nuclear reactors for safety tests after last year’s earthquake and tsunami. Kansai Electric Power Co.’s Ohi No. 3 and No. 4 reactors were restarted this month after government approvals.

Utilities increased thermal power output by 18 percent in June to compensate for a drop in nuclear generation, according to data released July 13 by the Federation of Electric Power Companies of Japan. The average utilization rate for atomic plants was 2 percent in the month, down from 37 percent a year earlier.

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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