Reuters is reporting that Asian spot LNG prices have risen for the second week in a row as Japan continues to suffer the effects of the latest heatwave.
LNG spot prices for September deliveries in Asia have reached US$10.00 per million Btu; up 25 cents from the previous week. Meanwhile prices for October deliveries are reportedly set at US$10.40 per million Btu.
Record high temperatures in Japan are expected to continue into August with Thomson Reuters Eikon data showing well above average temperatures in the country for the next 15 days. Temperatures in Seoul and Beijing are also expected to be above average over the next 15 days, but are expected to moderate over the period.
Power prices are following this same record-breaking trend and high levels of demand are forcing Japan’s largest electric utilities to fire up old fossil fuel power plants, and to increase production at those already in operation.
In terms of LNG demand, Japan’s Tohoku Electric is seeking two LNG cargoes for September delivery, while Kansai Electric has bought 2 – 3 cargoes per month. According to an industry source, this is a complete about-face for the latter who until recently had been in a selling position.
“How much more [Japan needs to buy LNG] will depend on the weather, but this heat is expected to continue for a while which will prompt more demand and tighten the market,” the source added.