Japanese Utilities’ LNG Stocks Drop 5% on Week To 1.67 mil mt

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  • Some Japanese power utilities seek spot LNG as inventory drops
  • LNG stocks at four-year average for end-January
  • Gas concerns ease after Indonesia lifts coal export ban

LNG stocks held by Japan’s major power utilities dropped further in the week to Jan. 30, falling 5.1% to 1.67 million mt from 1.76 million mt on Jan. 23, the Ministry of Economy, Trade and Industry said Feb. 2, reports Platts.

Stocks fall from peak

Stocks have fallen from a peak this winter season of 2.42 million mt on Dec. 23, METI data shows.

METI does not have directly comparable data for last year, but at the end of January 2021 stocks stood at 1.49 million mt, while the four-year average for end-January is 1.67 million mt, the METI data showed.

The sharp fall in the latest inventory data comes as several Japanese power utilities have been heard seeking LNG cargoes in the spot market as they look to ensure adequate supply through the winter demand season following weeks of elevated power demand.

Japanese LNG purchasing has stood out lately,” a Japanese power utility source said. “The Japanese inventory is considerably low as a whole.”

At least five Japanese companies recently bought spot LNG cargoes for power generation for February-March delivery following the depletion of LNG inventories, according to market sources.

Easing concerns

Following the recent rounds of spot purchases, Japan’s appetite for spot LNG cargoes for the current demand season might be coming off on the back of easing Indonesian coal procurement concerns.

At least two Japanese power utilities are no longer seeking additional spot LNG cargoes by the end of March after fulfilling their requirements, according to company sources.

Japan is cautiously optimistic about normalizing coal imports from Indonesia in February following the lifting of an export ban Jan. 27, officials with the Ministry of Economy, Trade and Industry told S&P Global Platts Feb. 1, as a few power utilities remain on alert to ensure sufficient fuel supplies.

Concerns surrounding securing thermal coal from Indonesia during Japan’s peak power demand season have receded following the lifting of the export ban, one of the officials said.

With coal gradually getting shipped from Indonesia, we might not see impact on gas as much as we had been previously concerned,” a Japanese power utility source said.

Monitoring LNG drop

METI has started releasing LNG stocks data weekly as part of its ongoing efforts to promptly detect any significant drop in the country’s LNG inventories for power generation this winter, in response to the lessons of last winter.

Japan’s power supply-demand balance tightened last January when the country experienced a surge in power demand that forced local power utilities to restrict gas-fired power generation due to low LNG stocks.

This was exacerbated by glitches at coal-fired power plants, low hydropower generation due to droughts, fluctuations in solar power output due to weather conditions, reduced oil-fired power generation capacity, and low nuclear power output.

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Source: Platts