London - Japanese imports of liquefied natural gas (LNG) hit their highest in at least five years in January, with shipments expected to continue at a brisk pace this month as freezing weather keeps its grip on the world’s top buyer of the fuel.
Japan’s imports of LNG rose to nearly 8.7 million tonnes last month, up 8 percent from December and the largest volume since at least January, 2013, according to ship tracking data on Thomson Reuters Eikon that stretches back five years. That upturn is piling further pressure on the region’s spot markets for the commodity, which marked three-year highs last month as China rushed to snap up cargoes for its drive to use gas to heat millions of homes and power thousands of factories. “A recent cold snap contributed to LNG demand for power (in Japan) as well as in city gas sector,” said Boseok Jin, a research analyst at IHS Markit. Unusually frigid conditions swept parts of Japan in January, with snow blanketing Tokyo at one point later in the month. Jin added that volumes of LNG delivered to the Nagoya area in central Japan surged by 10 percent in the November to January period compared with the same time a year before, while deliveries into Tokyo Bay increased by more than 4 percent. “We were all caught by surprise with the cold weather and (LNG) inventory is very low now,” said a source with a Japanese utility, declining to be named as he was not authorized to speak with media. Four months of maintenance at a nuclear reactor run by Kyushu Electric Power Co could also be boosting demand for LNG, the source said. And at least one utility is rushing to find a cargo for the second-half of February, the sources said, with cold conditions forecast to continue this month. But demand for LNG could fade as the weather heats up with spring’s arrival in March and as some nuclear reactors are due to restart around the same time, said IHS Markit’s Jin.