Japan's stocks of liquefied petroleum gas rose 4.69% month on month to 2.145 million mt as of September 30, marking the fourth straight month of increase as imports inched up to meet utility demand ahead of winter, data from the Japan LPGas Association showed Wednesday.
But the end-September inventories were down 6.33% from the year-ago level of 2.29 million mt, the data showed.
LPG imports crept up 0.5% last month to 815,000 mt, from 811,000 mt in August.
Import terminal running stocks -- supplies that refiners or importers can draw on -- jumped in September by 43.53% month on month to 366,000 mt, after rising by 4.1% in August to 255,000 mt.
However, compared with the year-ago period, import terminal running stocks were down 24.22%.
The rise in import terminal running stocks ahead of winter would help Japanese importers avoid a rush to buy, especially since the Saudi Contract Price propane swap market has moved into a backwardated structure for prompt-month November versus December at plus $2/mt Wednesday, compared with a slight contango late last week.
"We are fine with drawing down stocks, as long as the market remained backwardated," one end user said.
The recent price uptrend, largely attributed to concerns that supplies coming to Asia might not be as ample as expected ahead of winter for heating, also prompted Japanese traders and end-users to take a cautious stance on imports.
Prices of propane and butane cargoes for delivery along the key Singapore-Japan route were assessed at $923/mt and $952/mt, respectively, Wednesday. Propane was at the highest mark since September 5, when it hit $924/mt, while butane was last stronger on September 2 at $956/mt, Platts data shows.
"I don't think the November-arrival CFR Japan market can go up again... looks like there are more sellers than actual buyers," a trader in Japan said.
A Japanese importer agreed, noting current stockpiles looked ample. "Our LPG stocks are OK right now, and we don't have much buying to do in the spot market," he added.
Propane led the month-on-month increase in overall stocks, rising 6.77% at the end of September to 1.372 million mt, after having gained 6.73% to 1.285 million mt at end-August, and was almost similar to the level in September last year, the data showed.
Butane stocks rose in September by 7.07% month on month to 818,000 mt, after dipping in August by 5.45% to 764,000 mt. But butane stocks slid 11.28% year on year, the data showed.
Overall LPG demand for electric power generation in September soared by 32.8% month on month to 170,000 mt, after a month-on-month fall of 30% to 128,000 mt in August, the data showed.
Japan has been building up propane inventory since May ahead of summer, while a heatwave between July and September prompted Tokyo Electric Power Company, or Tepco, to buy 100,000 mt of LPG each month in July and August to fuel air-conditioners, sources had said.
Tepco continued to buy 60,000 mt of LPG in September, and had planned to purchase the same volume for October, a source close to the matter had said.
Japan's mandatory LPG stockpiles at the end of September edged down 1.79% versus the previous month to 1.643 million mt and was also down by about the same rate versus the year-ago period, data showed.
The Ministry of Economy, Trade and Industry requires that suppliers maintain inventory equal to at least 50 days of consumption.
