A A rise in coal use and hence coal imports from Japan is possible at the present time. In its latest weekly report, shipbroker Intermodal said: “Japan’s latest power generation data indicates a marked adjustment in the country’s energy mix, with utilities reducing LNG-based generation and increasing coal burning. In June, gas production fell by 16% year-on-year, while coal power generation by Japan’s largest utilities rose by about 5%. This shift was also reflected in trade flows. According to LSEG data, Japan’s LNG imports fell by about 9.5% year-on-year in June, while thermal coal imports rose sharply by about 27%, with Australia and Indonesia remaining major suppliers.
According to Intermodal Senior Analyst, Nikos Tagolis, “The decline in Japanese LNG imports, coupled with the increase in thermal coal purchases, appears to reflect short-term fuel economics rather than a structural change in energy policy. Utilities have responded to relatively high spot LNG prices by increasing coal use where available, using coal as a practical balancing fuel when gas becomes less competitive. Meanwhile, Asian demand for LNG is also supported by seasonality, as Region sees summer cool Spot LNG prices in Asia remained high in June, averaging more than $17 per mmBtu, compared with about $13.1 per mmBtu in Europe. This premium encouraged more resilient US LNG shipments to move towards Asia, with the region accounting for more than half of US LNG exports for the first time in two years, while shipments to Europe fell by about a quarter year-on-year in June.
Source: Multimedia
“Beyond seasonal demand, strong regional prices have not completely precluded buying from energy-short markets. Pakistan’s second spot purchase for spot delivery highlights that some Asian buyers remain constrained by near-term energy needs, even as LNG prices rise. With normal Qatari flows disrupted, Pakistan has faced increasing pressures on its energy system, making it willing to pay a premium for alternative cargoes. The dynamics of fuel switching and cargo remixing have different implications for LNG carriers. For LNG shippers, the impact is mixed, as higher LNG prices in Asia could attract more resilient cargoes to the region, supporting ton-mile demand as US cargoes move to longer-haul voyages to Asia rather than shorter routes to Europe. LNG importer after China in 2025 and accounts for about 24% of Asian LNG imports, so the key element is pricing: if high LNG prices persist, buyers may limit spot purchases, or rely more on inventories, or rely more on other energy sources.
“For dry bulk carriers, the impact is more directly supportive,” Mr. Tagulis added. “Rising coal generation in Japan is driving demand for seaborne thermal coal, especially from nearby suppliers such as Australia and Indonesia. This creates additional business opportunities for ships in the Pacific coal trade and strengthens coal’s role as a flexible balancing fuel, even as long-term policy remains focused on low-emission energy sources. Japan’s latest import pattern should be viewed within the broader energy shipping balance. Higher LNG prices could be positive.” per ton-miles when flexible shipments are rerouted over longer distances, but it also risks limiting the end-user demand needed to maintain those flows. The key question is whether current price differentials can continue to support shipping demand without further impairing LNG consumption.
Source: Multimedia
“Finally, a critical factor for this dynamic will be the potential normalization of LNG supplies in the Middle East. If Qatari production returns to more typical levels and flows to Asia improve, especially against the backdrop of a firmer Strait of Hormuz, spot LNG prices could decline and gas generation may regain some competitiveness. Until this is reflected in pricing and shipping movements, the Japanese energy sector is likely to keep fuel flexibility at the core of its strategy,” the Intermodal analyst concluded.
Nikos Rousanoglou, Global Hellenic Shipping News
