Three percent of Japan's total demand for LPG has been wiped out by the earthquake that hit the county earlier this month, though intensive buying by the Tokyo Electric Power Company (Tepco) could compensate for the reduction in demand to some extent.

Japan's domestic LPG demand will probably be eroded by a little over 500,000 mt, or 3 percent of the country's total demand of around 16.4 million mt, in the aftermath of the March 11 earthquake, Platts said in a release on Monday, citing sources.

Slightly above a million mt per year, or about 6.2%, of total domestic LPG demand comes from the Tohoku region, and we estimate at least 50% of this [demand] to have gone away after the disaster, it quoted a source at one of the LPG importers as saying.

Platts said LPG demand from both the Miyagi and Fukushima prefectures, where the LPG demand stood at around 290,00 mt and 220,000 mt, respectively, has seen significant drop.

Tepco's buying will compensate for the drop in demand to some extent. We expect Tepco to use anywhere between 800,000 mt and a million mt of LPG this year ... so if we're looking at say about 900,000 mt, that'll easily offset any demand loss from the domestic side, the source added.