Japan LNG Prices Bullish

The price of spot LNG imports for Japan contracted in June 2018 increased to a monthly average of $9.30/mn Btu, the country's  ministry of economy, trade and industry (Meti) said July 11.

That was up from $8.20/mn Btu it reported in May and even the $9.10/mn Btu in April this year, and contrasted with just $5.70/mn Btu in May 2017. Continuing strong demand from China is seen as a factor. Meti's prices are ‘delivered ex ship’ (DES) in Japan, or else are converted into such a ‘DES’ equivalent.

Market reports – so not from Meti – indicated that spot cargoes for northeast Asia spiked early last month at $11.60/mn Btu for July delivery but now are trending down towards the $10/mn Btu mark for August cargoes.

Meti also published July 11 official average arrivals-based prices each month for spot LNG cargoes. The latest figures show an increase to $8.90/mn Btu in June, from $7.90/mn Btu in May and even beating the $8.80 recorded for April. These values are far higher than year ago levels of $5.60/mn Btu in June 2017 and $5.70/mn Btu in May 2017. 

Separately, CME Group – the Chicago-based exchanges group that also includes the New York Mercantile (Nymex) – said July 10 it and Cheniere Energy had reached an agreement through which CME Group will develop the first-ever physically deliverable LNG futures contract based on Cheniere's Sabine Pass terminal on the US Gulf Coast (see story filed on July 10). CME said that as US Gulf Coast LNG is increasingly exported to Asia and elsewhere, there will be an increased need for producers and customers to hedge their price risk.