Japanese imports of coal increase 22% in February
The 10 major Japanese utilities imported 5m tonnes or 22% more coal month on month in February, new data from the power producers shows.
The Federation of Electric Power Companies of Japan (FEPC) data out on Thursday reveals the utilities bought 5m tonnes during February, which is 28% higher than the 3.9m tonnes imported a year earlier. Japan only imported 5m tonnes or more in January once during 2012.
FEPC said total electricity generation was down year on year, with thermal-fired power production dropping 7.7%. Temperatures in Japan during the month were higher than a year earlier, the association said.
The amount of coal consumed for generation by the utilities was pretty much flat year on year despite the decrease in overall and thermal generation, but dipped month on month.
Japan takes the biggest slice of the high-quality thermal coal from the Australian FOB Newcastle coal market. Data for the two Port Waratah Coal Services-operated terminals at Newcastle showed 58% of tonnage was shipped to Japan in February.
Japanese utilities secure around 80-85% of their total coal demand through yearly contracts and only tend to buy spot contracts to balance their needs. There are some signs of Japanese utilities getting more active on the spot market with one of the 10 in particular Chubo Electric Power adding more spot supply, but this activity is still limited, according to market participants.
Annual negotiations between Japanese power utilities and Australian coal producers for the fiscal year starting in April are under way at the moment. While the Japanese generally lock in supply on contracted volumes, the settlement price is usually a few dollars a tonne above spot prices at FOB Newcastle. The outcome of the negotiations tends to have a big influence on physical and swaps markets.
Deal activity at the spot physical FOB Newcastle market has been quite strong since February, after a certain amount of inertia had crept in the preceding months. An April-loading 25,000-tonne cargo was sold at $93.25/tonne on Wednesday, which was $3/tonne above a deal for the same cargo on Tuesday.
Sources thought the big jump day on day might be linked to the annual negotiations. "It is still [an] early [stage in negotiations]," said one broking source, "so no strong indications have come out yet about the [settlement] price." Fionn O'Raghallaigh
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