Japan power utilities' LNG stocks jump 11% to 1.95 mil mt, a 14-week high

LNG stocks held by Japan's major power utilities jumped 10.8% week on week to 1.95 million mt on April 24, from 1.76 million mt the week before, data released April 27 by the Ministry of Economy, Trade and Industry showed, rising to the highest level in 14 weeks.

The April 24 LNG inventory marked the third week-on-week increase and is the highest level since Jan. 16 when it stood at 2.01 million mt.

The power utilities' LNG stocks started increasing this month but remained below the five-year average as of April 17, METI said in its documents presented at its electricity and gas policy subcommittee on April 26.

METI does not have direct comparable data for the same week of April 24 in 2021. However, at the end of April 2021, the inventory stood at 2.01 million mt, with the four-year average for end-April at 1.90 million mt, METI's data showed.

As Japan has entered the off-peak demand season for power generation, at least a few Japanese power utilities do not see any spot LNG requirements at least until June, market sources said.

The Platts JKM for June delivery has been hovering between $22/MMBtu and $26/MMBtu since the roll on April 18, and was at $22.599/MMBtu on April 26, according to Platts assessment from S&P Global Commodity Insights. Spot LNG prices were last assessed lower on Feb. 16, 2022.

Platts assessed the JKM at more than a two-month low on April 26, on limited demand from Asian importers due to elevated spot LNG prices, end of the peak demand season and a trend of falling gas prices in the Atlantic.

Nevertheless, it was significantly higher compared with assessments on April 26 in 2021, 2019, and 2018, at $8.30/MMBtu, $5.467/MMBtu, and $7.975/MMBtu, respectively, as prices in 2022 remained supported by the ongoing Ukraine-Russia war and production uncertainties at Indonesia's Tangguh and Australia's Northwest Shelf.

Through March LNG prices remained elevated, but started falling from April due to weaker downstream demand and healthy supply, following a series of purchases from importers in China, Japan, South Korea and Taiwan for spring and summer cargoes in the first quarter of 2022.