The price for spot LNG shipped to Japan in July fell to an average of $4.70 per million British thermal units (mmBtu), the lowest since May 2016, when the price was $4.10/mmBtu, data from the Ministry of Economy, Trade and Industry showed.

The July price was the third lowest for monthly spot cargoes since METI began compiling the data in March 2014, and was down from $5.50/mmBtu in June.

The drop in spot LNG prices is helping Japan's utilities cut costs but their overall import price in June was much higher, at $9.14/mmBtu, because most of their fuel purchases are done via contracts linked to oil prices.

The spot market decline is pushing utilities in Japan to be more aggressive in price reviews built into these traditional long-term contracts, Reuters reported this week.

The tougher stance marks a shift for Japanese utilities, which have long favoured stability of supply over price, partly because they have been able to pass on costs to consumers, but are now facing competition from new entrants.

Tokyo Gas, Hokkaido Electric Power, Tohoku Electric Power, Kyushu Electric Power and Hokuriku Electric Power have all said they are looking at ways to take advantage of cheaper spot LNG.

But the utilities are also limited in the number of spot cargoes they can take because most of their supply is met via the take-or-pay, long-term contracts.

METI surveys spot LNG cargoes bought by Japanese utilities and other importers, but only publishes a price if there is a minimum of two eligible cargoes reported by buyers.