Japanese buyers seek prompt spot LNG cargoes amid prolonged heat waves: sources

Some Japanese LNG buyers have returned to the spot market, seeking additional prompt cargoes -- including via a swap tender -- amid forecasts of prolonged heat waves in the country, market sources told Platts, part of S&P Global Energy, on Sept. 3.

Kansai Electric issued an LNG cargo swap tender, closing Sept. 3, to buy for delivery in the Sept. 30-Oct. 1 window and sell in the Oct. 28-Nov. 1 period, market sources said.

The Osaka-based power utility issued the LNG cargo swap tender, seeking a prompt cargo through the swap rather than purchasing an outright cargo, market sources added.

Some power companies, such as JERA, may seek prompt LNG cargoes, including for October deliveries, amid ongoing heat waves, according to market sources.

JERA has been buying spot LNG cargoes for the summer mainly from its existing suppliers, including term suppliers, a source familiar with the matter said.

The Japan Meteorological Agency said Aug. 28 that all regions in the country are forecast to experience temperatures above the 30-year average over Aug. 30-Sept. 29, with an 80% probability.

Above 30-year-average temperatures are expected to continue into September-November, with a 60% chance nationwide, the JMA said in its three-month weather forecast released Aug. 19.

The projected hotter-than-usual weather in Japan is affecting the balance of LNG procurement versus demand, despite the seasonal arrival of the shoulder-month demand period for power generation.

Low inventory

Japan's seeking of prompt spot LNG cargoes comes as LNG stocks held by major power utilities fell 7.8% week over week to 2.01 million mt on Aug. 31, the Ministry of Economy, Trade and Industry said Sept. 3, dropping below the five-year average amid ongoing heat waves.

The country's fuel inventory for power generation is expected to hit its minimum level on Sept. 8, based on stock monitoring for Sept. 6-Oct. 23, according to a survey released Aug. 22 by the Organization for Cross-Regional Coordination of Transmission Operators.

Data monitored by the OCCTO -- comprising all power companies in Japan -- showed that Japan's fuel stocks are set to reach 12.120 TWh on Sept. 8, equivalent to a six-day average of electricity consumption if power demand remains at the 30-year average.

Meanwhile, Japan's gas-fired power capacity outages are set to rise in the coming weeks, as scheduled maintenance programs begin, shutting a combined 29.623 GW of gas-fired capacity at their peak on Oct. 25, according to company filings to the Hatsuden Joho Kokai System.

Gas-fired capacity outages are set to rise to 22.763 GW on Oct. 3 from 12.965 GW on Sept. 3 and gradually drop to 13.740 GW on Dec. 4, as the country enters the winter heating demand season, after reaching the peak on Oct. 25, according to HJKS data.