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Cold spell drives Japan LPG imports until Feb to meet city gas supply for heating

Increase font size  Decrease font size Date:2021-01-28   Views:272

  Tokyo/Singapore—Japan's cold spell has stoked LPG demand in city gas supply for heating, boosting imports until February, though this might not last until March, trade sources said.



  The increase in city gas demand requires incremental supply of LPG -- which has a higher calorific value, or energy content -- and is used to add calories into regasified gas from LNG for city gas use, a Japanese city gas source said.He added that Japan's city gas sector was also seeing incremental LPG demand for heating due to the severe winter.



  "Japanese LPG demand is not too bad," a Japanese trader said, while an Asian trade source said Japanese importers "bought quite a lot for February delivery, probably five full cargoes," or around 220,000 mt.



  The Japanese trader said this was a bigger monthly volume than usual, "but not too much, I feel."



  Trade sources said they doubted Japanese importers would buy a similar volume for March delivery.



  This comes as Japanese utilities have overcome the worst of gas shortages that pushed Asian LNG spot prices to all-time highs of $32.50/MMBtu recently.



  LNG stocks held by Japanese power utilities have also begun to recover after plunging to a multi-month low of 1.16 million mt on Jan. 11,



  as the country is past its peak power demand for winter, a survey released Jan. 19 by the Ministry of Economy, Trade and Industry showed.



  POWER DEMANDJapan's power demand -- an indicator of city gas demand for heating -- peaked on Jan. 8, and electricity demand in H1 January was around 10% higher than a year earlier, according to METI documents.



  It has since dropped below the year-earlier level.



  In line with easing power demand, Japan's overall thermal power plant utilization rates, including coal, oil and LNG, have also declined.



  Overall thermal power plant utilization peaked twice during winter, at 88% on Jan. 8 and at 86% on Jan. 12, before dropping to 62% on Jan. 17.



  Japan's oil-fired power plant utilization rates fell to around 25% on Jan. 17 from around 64% on Jan. 12 after peaking at just above 88% on Jan. 8, according to METI documents.



  LPG DURING WINTERAhead of the extended cold spell, Japan's LPG stocks had fallen almost 6% month on month to 1.609 million mt in November, down for the second month in a row, after rising for five straight months before that, as demand continued to rise and imports jumped for winter, according to preliminary data from the Japan LP Gas Association released Dec. 28.



  In separate data released Jan. 19 by the association, Japan's LPG sales for households surged 17% month on month to 615,563 mt in November, and were up 1.3% year on year.



  LPG sales for city gas surged 26.2% on month to 85,322 mt in November, though they fell 19.5% on year, according to the association data based on domestic sales by Japanese major LPG importers.



  November LPG sales for industrial use rose 7.1% on month to 259,998 mt, and were up 4.1% on year.



  Total domestic LPG sales jumped 11.2% on month to 1.133 million mt in November, but fell 5.7% on year, as a result of decreased LPG use for cars, city gas and chemical feedstock.



  Winter demand in Japan, China and South Korea began driving up front cycle CFR North Asia propane prices from $482/mt on Nov. 25 to a six-year high at $687/mt on Jan. 18, S&P Global Platts data showed.



  As winter demand starts to wane, prices have been retreating to near seven-week lows at $594/mt on Jan. 22 before recovering slightly in recent sessions, Platts data showed.



  Propane prices on a CFR North Asia basis averaged $485.37/mt in the fourth quarter of 2020, up slightly from $482.08/mt in Q4 2019, Platts data showed.


 
 
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