Showing posts with label Tokyo. Show all posts
Showing posts with label Tokyo. Show all posts

Friday, October 27, 2017

A 'Crude' view from Tokyo: Japan’s delight at oil & gas buyers’ market

The Oilholic is delighted to be back in Tokyo, some 6,000 miles east of London. However, this one’s a splash and dash trip barely days after Prime Minister Shinzo Abe’s thumping election victory in a snap election the incumbent called. 

Though Abe is not universally popular by any means – as this blogger observed upon interaction with members of the voting public on behalf of IBTimes UK – the incumbent still coasted to an election victory offering a safe pair of hands and an economy that is tagging along nicely. 

It has been unquestionably helped in no small part by an oil and gas buyers’ market that corporate Japan and the country’s policymakers are pleased with. 

More so, as demand in Asia’s most advanced economy is on the decline courtesy of energy efficiencies that are miles ahead of many others in the industrialised world.

In fact, Japan’s oil demand has been in a structural decline for a number of years with the rise of cars with better mileage, usage of alternative fuels, very visible electric vehicles and last but not the least an ageing population. 

According to contacts within the analyst community in Tokyo, Japan’s average crude demand currently stands at 3.5 million barrels per day (bpd), down from its peak of 5.9 million bpd noted back in 2005. India has indeed overtaken Japan to become the world’s third-largest importer of crude oil with an average demand of 4.2 million bpd.

Nonetheless, whatever Japanese importers take is increasingly coming on their terms in a buyers’ market. In fact, the Oilholic’s sources in trading circles suggest spot Brent is at least $1.90 cheaper  per barrel compared to forward delivery toward the end of first quarter of 2018.

The natural gas market, though tied into the long-term contracts, is also spoilt for choice with Qatar, Australia and US consignments jostling for attention, and buyers awash with gas are looking for legislative changes to offload some of their surplus holding to near Asia. 

Most local commentators feel the decoupling of gas prices with the Japan Customs-cleared Crude (JCC), or the Japanese Crude Cocktail, if you would, is nearly complete. But then again, the JCC itself is not as high as it was a mere five years ago, and the days of $12-15 mmbtu gas prices and $10 premiums to the US Henry hub are a thing of the past. 

Unsurprisingly, Japan’s anti-monopoly regulator ended LNG re-sale restrictions over the course of the summer. The decision to end destination restriction clauses is 100% likely to lead to more trading of LNG cargoes by buyers in Japan, who can become sellers of their surplus holdings. And if Japan can do it, the wider region is bound to follow. 

In the fiscal year 2016-17, ended March, Japan imported 85 million tonnes of LNG worth about $30 billion, according to official data. So to say the country is in a strong position to renegotiate supply terms without destination restriction clauses would be an understatement. As the world’s biggest importer of LNG – it is in a commanding position to renegotiate with Qatar and Malaysia its two biggest suppliers. 

Away from crude matters, here is a link to one’s IBTimes UK exclusive on the ongoing Kobe Steel scandal, based on the comments of a whistleblower, who gave his take to your truly on the state of affairs and how a culture of fear led to the ongoing fiasco.

And on that note, it’s time to say goodbye to Tokyo. It was a brief three-day visit, but always a pleasure to be in this vibrant global capital of commerce. 

However, before one takes your leave, here’s a glimpse of some midnight petroheads – driving a convoy of what appears to be go-carts – in the small hours of the night, whom the Oilholic spotted while on pleasant evening walk back from Roppongi Hills to his hotel in Shiba Park. Only in Japan!

That’s all from the land of the rising sun. It time for BA006 back to London Heathrow. More soon. Keep reading, keep it ‘crude’. 

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© Gaurav Sharma 2017. Photo 1: Tokyo skyline, Japan. Photo 2: Midnight go kart racers in Roppongi Hills, Tokyo, Japan © Gaurav Sharma 2017. 

Friday, March 18, 2016

Why Ginza’s bullion traders love BoJ these days

Just happens to be a coincidence that the Oilholic is in Tokyo to witness the conclusion of the Bank of Japan’s two-day monetary policy meeting. There were no major surprises, as Governor Haruhiko Kuroda and his board left the country’s benchmark interest rate unchanged at -0.1% in line with market expectations.

The BoJ remains well below its 2% inflation target, headline economic growth is stagnant, exports are flat and well the Oilholic can personally testify that the yen, a preferred carry trade currency, is soaring making life for overseas visitors all that pricier! The pound sterling was lurking around JPY150 level, while the dollar fell below JPY113.50 following the BoJ’s decision which greeted the market on Tuesday.

Most analysts here think further economic stimulus both from the BoJ as well as the Shinzo Abe administration is all but inevitable, with Governor Kuroda noting: “Japan’s economy has continued its moderate recovery trend.”

Moderate, quite simply might not be enough for most Japanese people, hence the weighting in favour of stimulus is rising. However, not everyone is unhappy about the central bank’s policy stance – gold bullion traders are among those with beaming smiles.

According to Tanaka Kikinzoku Kogyo (KK) store in Tokyo’s Ginza district, cited by Bloomberg, the price of gold bars rose to JPY5027 (£31.14, $44.30) per gram on March 11; that’s the highest since July last year.

“Many customers are wagering that it is better to turn their savings to gold as a safe asset rather than deposit money at banks that offer low interest rates,” a spokesperson for the store told the newswire.

The said interest was going strong even at prices exceeding and staying steady above JPY5000 per gram as the Oilholic prepared to leave Tokyo on Friday with cherry blossoms (or “sakura”) having bloomed a few weeks early on the sidewalks and parks not far from the City's historic bullion district and destination for upmarket shopping.

That’s all from Japan folks as the far eastern adventure comes to an end, and a North American one is about to begin. Next stop Vancouver, British Columbia, Canada! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2016. Photo: Bank of Japan, Tokyo © Gaurav Sharma, March 2016.


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