Japan Government Change Seen by Platou Curbing LNG Shipping

The new Japanese government’s support for nuclear power could cut demand for imports of liquefied natural gas, curbing shipping rates, according to RS Platou Markets AS, an Oslo-based investment bank.

The world’s largest importer of the fuel will reduce costlier oil imports first, meaning 21 nuclear reactors can be restarted before LNG imports need to be curbed, Frode Moerkedal, an Oslo-based analyst at Platou, said in an e-mailed report today. An 8 million metric ton decline in annual imports would reduce fleet utilization by 4.5 percentage points, he said. That would have cut spot rates this year to $83,000 a day from $125,000, Platou estimates.

Shinzo Abe’s Liberal Democratic Party yesterday won 294 seats in the 480-member lower house of parliament. Japan must restart its nuclear reactors quickly because of the high prices for gas, coal and oil used to fire thermal power plants, Hiroyuki Hosoda, chairman of the party’s general council, said Nov. 27. Weaker LNG demand from Japan could lead to lower prices, closing the premium to other regions, known as an arbitrage, that has prompted traders to bring cargoes to the country from suppliers in the Atlantic Ocean.

“Depending on the pace of nuclear the ramp-up, we see a negative impact on LNG spot rates,” Moerkedal said in the report. “However, for this to materialize the Atlantic-Pacific arbitrage must close, most likely as a result of lower Asian LNG spot/short-term prices.”

To contact the reporter on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

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