(Updates with link to Factbox)
By Yuka Obayashi and Yoshiyasu Shida
TOKYO, June 2 Japan's Mitsui & Co Ltd
plans to expand its liquefied natural gas (LNG) trading
operation as demand for the cleaner fuel spurs more spot
transactions in Asia, a senior executive told Reuters.
The move comes amid a big shift in the market in Asia, which
takes in about 70 percent of global shipments of LNG, with
traders and end users increasing their ability to trade in
anticipation of a supply influx from Australian and U.S.
Utilities such as Tokyo Gas and Kansai Electric
Power that often tie up with Mitsui and other Japanese
trading houses are expanding trading operations after winning
more flexible terms on contracts, allowing them to resell excess
cargoes, something unheard of only a few years ago. nL3N1HD1RA]
"We are going to reinforce our LNG team at our energy
trading unit in Singapore as LNG spot trading is on the rise,"
Hiroyuki Kato, Executive Vice President of Mitsui & Co Ltd
said in an interview on Thursday.
The unit has about 70 staff, mainly focusing on oil, but it
will increase the number of LNG traders in the next few years
from only a few now, Kato said, without giving details.
Around 260 million tonnes of LNG was shipped globally in
2016, according to the International Group of Liquefied Natural
Gas Importers (GIIGNL). Spot trades, defined by GIIGNL as
cargoes delivered within three months from the transaction date,
totalled around 47 million tonnes, 15 percent higher than in
Japan takes in nearly a third of global shipments but in the
last year China has emerged as a big importer. Kato says Mitsui
is betting demand will surge as it did with iron ore, where the
trading house has built up expertise.
Mitsui traded 2.8 million tonnes of LNG in the year ended
March 31, but will receive more supplies from next year when the
Cameron LNG project in Louisiana starts operations.
The Japanese company has signed up to take 4 million tonnes
of LNG annually from the project, with some of it tied up in
term contracts leaving it with volumes to trade.
"What has helped grow our iron ore operation was China's
shopping spree. The same will likely happen for LNG, led by
China, along with Southeast Asia and India," Kato said.
"If China switches 5 percent of its power sources to gas, it
will boost LNG-equivalent demand by 80 million tonnes, the same
as Japan's total imports."
China currently imported about 26 million tonnes of LNG in
2016, up by a third from a year earlier.
The company is also looking for buyers for supplies from an
LNG project in Mozambique led by Anadarko in which
Mitsui has a stake.
"Our aim is to win binding long-term commitments," Kato
On iron ore, he said prices have fallen too far, with
Chinese futures for the steel making ingredient slumping to a
six-month low on Thursday, down 40 percent from this year's
"It has slightly overshot recently," Kato said, predicting
that the iron ore market will become tighter from 2021-22
follwing the end of an expansion phase by miners, while China's
crude steel output will keep climbing through 2025.
"Our iron ore business is making profits even at the current
price, but we want to cut costs at mines further by adopting
artificial intelligence and other technology," he said.
($1 = 111.1500 yen)
(Reporting by Yuka Obayashi; Editing by Aaron Sheldrick and