JAPAN DATA: LNG stocks drop further to 1.56 mil mt, lowest since end-Jan 2021

LNG inventory held by Japan's major power utilities stood at 1.56 million mt Sept. 24, down 1.9% from 1.59 million mt a week ago, data released by the Ministry of Economy, Trade and Industry showed Sept. 27, marking the lowest level since end-January 2021.

On a weekly stock level, the Sept. 24 LNG inventory was the lowest in 81 weeks as it was last lower on March 6, 2022, when stocks stood at 1.45 million mt. Compared with the end-month stock levels, the latest LNG stocks, however, was the lowest since 1.49 million mt at the end of January 2021.

The drop in LNG stocks came as Japanese power utilities used more than expected LNG from an increase in power demand amid the country's prolonged heat.

METI is now closely watching whether the power utilities will be able to build its LNG inventory via steps including spot procurements for winter as the utilities are advancing their LNG delivery shipping schedules following drops in the LNG inventory, a METI official told S&P Global Commodity Insights.

Lowest since end-Jan 2021

METI does not have comparable data for Sept. 24, 2022, however, LNG stocks stood at 2.66 million mt at the end of September 2022, with the five-year average at 2.06 million mt for end-September.

The Sept. 24 LNG inventory is the lowest level since January 2021 on the end-of-month comparison, when Japanese power utilities were forced to restrict their use of LNG for power generation in the face of robust power demand from severe cold spells experienced in the country.

Japan's LNG stocks for power generation dropped to as low as 1.42 million mt at the end of December 2020 as a result of severe cold spells hitting the country at the end of the year.

Taking the lesson from the severely tightened power supply balance in January 2021, Japanese power utilities have been securing LNG at a level comfortably above their demand for the demand seasons following the implementation of METI's fuels guidelines as its policy step.

METI's weekly LNG inventory data release also started as part of its policy response to the severely tightened power supply balance in January 2021 to detect any significant drop in the LNG stocks on a timely-basis.

The end of November 2020 stocks stood at 1.66 million mt, compared with 1.53 million mt at the end of October 2020.

METI also Sept. 27 revised lower the Sept. 17 LNG stocks to 1.59 million mt from 1.62 million mt reported earlier, as well as revising higher the Sept. 10 inventory to 1.69 million mt from 1.66 million mt earlier.