Japan Power Utility LNG Stocks Fall Below Five-Year Average as Summer Demand Builds
Power utility LNG stocks in Japan stood at 2.08 million tonnes as of June 28, down 6.7% from a year earlier and 1.9% below the five-year seasonal average of 2.12 million tonnes, according to Japan NRG data.3
LNG arrivals in May totalled 4 million tonnes, down 15.1% year-on-year and 7.3% below April's 4.3 million tonnes. Japan is entering peak cooling season with utilities carrying thinner gas buffers than they held in the same period of 2025.3
Australia supplied roughly 40% of May's LNG, with the broader Asia-Pacific region contributing another 25%. But Australian volumes have been stagnant. LSEG seaborne LNG data showed Australia's total exports fell to 65.8 million tonnes in 2025, down from 67.7 million tonnes the previous year, even as global LNG trade expanded 5.2% year-on-year in the same period. Monthly Australian output has been stuck between 6.2 and 7.2 million tonnes with no growth in sight.1,3
The U.S. stepped into some of that gap. American LNG deliveries to Japan jumped to 680,000 tonnes in May from 190,000 tonnes in April, a nearly 2.5-fold surge.3 U.S. supply is providing a partial offset, but the volumes remain too small to restore year-ago import levels on their own.
Crude oil imports told a similar story of contraction. Japan imported 4.7 million kilolitres of crude in May, down 57.3% year-on-year, the lowest on record, according to Japan NRG data. The Middle East supplied nearly 84% of that total, down 10 percentage points from historical averages, pointing to persistent disruption in traditional procurement channels.3
Thermal coal moved in the opposite direction. May imports came in at 6.6 million tonnes, down 7.1% from April but up 14.1% year-on-year.3 The divergence between falling LNG volumes and rising coal arrivals points to fuel switching in the power sector, with utilities drawing on coal-fired capacity to compensate for tighter gas supply. That shift carries implications for Japan's decarbonisation commitments through the rest of 2026.
At the industrial margin, Japan added a new supply channel. Gas Engineering Solutions agreed to supply city gas derived from imported biomethane to Fujifilm's Ashigara Site in Kanagawa, marking Japan's first use of imported biomethane-based city gas in the chemical sector.3 The volume is small, but it establishes a commercial precedent for biomethane as an industrial fuel in Japan's energy mix.
Despite the volume decline, total import values rose 3.3% month-on-month in May, a sign that unit prices were higher.3 JKM front-month Asian LNG was trading at $16.07 per MMBtu on July 6, flat on the day. The yen was at 162.29 per dollar, meaning every dollar-denominated cargo costs more in local currency terms than at this point last year.
The competitive picture among Asian buyers has shifted. South Korea's imports of Australian LNG rose 28% year-on-year to a record 12.5 million tonnes in 2025, while Japan's intake grew a more modest 4.7% to 22.2 million tonnes over the same period, according to LSEG data.1 South Korea's stronger volume growth suggests it secured more flexible contract terms or better spot access than Japan.
Some forecasters project Australian LNG production could reach 100 million metric tonnes annually over the next decade, which would exceed Qatar's current output.2 For now, output remains range-bound. If utility stocks do not recover meaningfully before August, Japan's power sector faces elevated spot exposure during peak summer demand, paying a JKM premium that its long-term contracts were not priced to absorb.