Japan, one of the world’s top buyers of liquefied natural gas, is rushing to secure supplies for winter, exacerbating a global shortage and driving prices of the super-chilled fuel higher.
The Asian benchmark spot price has jumped over the past week, although is still almost 70% off the record set in early March, when Russia’s invasion of Ukraine upended markets. Several Japanese utilities accelerated discussions with suppliers in the past week to purchase additional shipments for winter, according to traders with knowledge of the matter.
Supply disruptions from Russia to the U.S. have importers worried that there won’t be enough natural gas for everyone when demand peaks in the northern hemisphere winter. That’s intensified competition between Asia and Europe for LNG shipments, sending spot prices in both regions to unprecedented heights for this time of year.
The two largest LNG importing companies — Korea Gas Corp. and Japan’s Jera Co. — are both in the process of buying more supplies for winter. That prompted smaller Japanese utilities to dive into the spot market to also secure shipments while the fuel is still available, traders said.
The Japanese government has been urging the nation’s utilities to stock up inventories before winter amid an outlook for tight power supplies, according to the traders.