- Japan’s LNG stocks are below their seasonal low for power generation.
- Japanese power utilities buy, seek spot LNG cargoes, Winter power demand, Indonesia export uncertainty weighs
Japan’s LNG stocks held by major power utilities fell 6.9% on the week to 2.01 million mt on Jan. 16, the lowest since end-October 2021, Ministry of Economy, Trade, and Industry said on Jan. 19, says an article published in Platts.
Depleting stocks
The latest LNG inventory data underlines continued depletion in stocks seen over the last few weeks amid peak winter power demand season.
The Jan. 16 LNG stocks fell from 2.16 million mt on Jan. 9, but were above the 1.49 million mt held at the end of January 2021, as well as the four-year average of 1.67 million mt for the end of that month, the METI data showed.
However, the inventory was below the country’s seasonal low for power generation, which was during the autumn of last year.
Unexpected outages
The inventory data was being closely monitored by the LNG market, as Japan has recently experienced snowstorms and unexpected outages at coal-fired power plants amid prolonged uncertainty over Indonesia’s coal exports, supporting gas-fired power generation.
At least one Japanese power utility was heard to have bought several spot LNG cargoes for February, and another Japanese power utility was seeking a spot LNG cargo for February, market sources.
JERA
The lower LNG stocks also came to light after JERA, Japan’s largest power generation company, imposed fuel restrictions at its No. 1-1, No. 1-2, No. 2-1, and No. 2-2 gas-fired units, each with 595 MW of capacity, at its Joetsu thermal power plant in the northwest over Jan. 16-26, due to lowered fuel stocks from oceanic weather conditions, according to its filing to the Hatsuden Joho Kokai System, or HJKS.
Restrictions due to weather
JERA plans to impose fuel restrictions at its No. 5 and No. 6 coal-fired units, with a 600 MW capacity each, at its Hirono thermal power plant in the northeast, from 10 pm local time (1300 GMT) Jan. 19, due to lowered fuel stocks from oceanic weather conditions, the company said in its filing to the HJKS. The company is yet to disclose the timeline for normalizing output at the Hirono units.
JERA also plans to restart the 1 GW No. 5 coal-fired unit at the Hekinan thermal power plant in central Japan on Jan. 24, after an unplanned shutdown due to boiler-related issues on Jan. 14, the company said in its filing to the HJKS.
METI’s release of LNG stock data is part of its ongoing efforts to promptly detect any significant drop in the country’s LNG inventories for power generation this winter in response to the lessons of last winter.
A surge in power demand
Japan’s power supply-demand balance tightened last January when the country experienced a surge in power demand that forced local power utilities to restrict gas-fired power generation due to low LNG stocks.
This was exacerbated by glitches at coal-fired power plants, low hydropower generation due to droughts, fluctuations in solar power output due to weather conditions, reduced oil-fired power generation capacity, and low nuclear power output.
Indonesian uncertainty
Some Japanese power utilities are also closely assessing the impact on their LNG requirements from coal cargoes arriving from Indonesia during the country’s peak winter power demand season, following the recent ease in export restrictions by the Southeast Asian country, according to market sources.
Ban on export
Three ships loaded with thermal coal have left Indonesia bound for Japan amid uncertainty over three more coal carriers scheduled to leave in January, an official with Japan’s Ministry of Economy, Trade, and Industry told after Indonesian authorities eased a ban on exports.
“We are closely monitoring the impact amid increased talks on Indonesia,” a Japanese power utility said. “Although our [exposure to Indonesia] is not so large, if this situation lasts in February, we might see the impact on LNG among power utilities.”
The thermal coal carried by the three carriers, which are likely arriving in January, will be used for thermal power generation as well as at industrial plants, the METI official said, adding that the ministry remains vigilant about ensuing developments.
Once they depart Indonesia, these coal carriers would arrive in Japan in about nine days, when it will still be in the midst of power demand season. Japan, which imports more than 60% of its thermal coal requirements from Australia and 13% from Indonesia, has about one month’s worth of stockpiles held by local power utilities and independent power producers.
Indonesia has eased its coal export restrictions after imposing a blanket ban on exports of thermal coal for the month starting Jan. 1 after state-owned power company Perusahaan Listrik Negara reported critically low coal stocks at power plants.
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Source: Platts
