HomeNewsJapan's May LNG imports plunge on rising nuclear, healthy stockpiles

Japan's May LNG imports plunge on rising nuclear, healthy stockpiles

6/15/2023

(Reuters) - Imports of liquefied natural gas (LNG) to Japan fell in May by 20%, data from the Ministry of Finance showed on Thursday, as rising nuclear power usage and ample stockpiles reduced purchasing needs.

Japan, which competes with China for the rank of the world’s top LNG buyer, has seen its imports on decline after a moderate 0.5% rise in January. LNG purchases were down by 19% in April after a 12% decline in March and a fall of 10% in February.

The finance ministry said that Japan imported 4.61 million tons of LNG in May, down from 5.76 million tons purchased the same period a year ago. The ministry did not provide an explanation for the figures.

Japan’s falling LNG import is because of an increase in nuclear power after suspensions following the Fukushima Daiichi disaster in 2011 and as companies sit on healthy inventories accumulated last year on supply shortage fears, analysts say.

Japan currently has 9 gigawatts (GW) of operating nuclear capacity, more than double from the same period last year, according to Yoko Nobuoka, senior analyst of Japan power research at Refinitiv.

“In the months to come, Japan’s LNG imports could continue to show a double-digit (year-on-year) decline, given the higher availability of nuclear power,” she said.

Nobuoka expects an average of 10 GW of nuclear power to be operating from July to September, up from 6 GW during the same period last year.

Amid the weak demand and high inventories, Asian spot LNG prices have dropped to $9 per million British thermal units, the lowest in two years.

However, those lower prices may prompt utilities to switch back to gas-fired power plants and the import decline rate may ease, Nobuoka said.

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