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Japanese utilities continue to import coal above 2012 levels

17 Jun 2013 14:49:45 | csd

Japan's electricity utilities bought 4.24m tonnes of coal in May - 22% more year on year - as the return of coal-fired plants continues to pushes imports above 2012 levels, latest data from the utilities shows.

Federation of Electric Power Companies (FEPC) of Japan data out on Friday shows imports dipped by 6.2% month on month from 4.52m tonnes.

Coal imports also surged by 22% year on year in April because of the start-up of the Hirono and Hitachinaka coal-fired units, which are owned by utilty Tokyo Electric (TEPCO), as well as Tohoku Electric Power's Haramachi plant. The plants were switched off because of the earthquake and tsunami that hit Japan in March 2011.

Japanese utilities burned through 4.14m tonnes of coal in May - almost as much as was imported - for power generation, which suggests the Japanese utilities' demand for coal will be strong in June.

Nuclear generation in the country has started to eat into thermal generation, although only units 3 and 4 at Kansai Electric's Oi nuclear plant are generating in Japan now. Thermal generation decreased 3.2% year on year because of increased nuclear-generated power, FEPC said.

Japan imports most of its coal through long-term contracts agreed with Australian producers. In early April mining company Xstrata and Japanese utility Tohoku Electric, which represented their respective sides in negotiations, agreed a price of $95/tonne for the latest annual contract. This is about $11/tonne above current spot market prices at FOB Newcastle, but Japanese utilities prefer to lock in supply of high-grade coal.

Monthly statistics for the two Port Waratah Coal Services (PWCS) terminals at the Australian port of Newcastle - where most of Australia's thermal coal is exported from - show 4.38m tonnes of thermal and coking coal was shipped to Japan in May.

No breakdown was given by country, but overall thermal coal accounted for 83% of exports from the PWCS terminals. The third Newcastle Coal Infrastructure Group-owned terminal at Newcastle does not release such statistics.

The increase in coal imports for baseload generation has largely displaced more expensive oil-based products.

The impact of Fukushima - and the subsequent shut down of all but two of the country's nuclear reactors - forced Japan's electricity utilities to ramp up heavy fuel oil and crude imports by 90% year on year in 2012, and LNG imports by 14% to 58.68m tonnes, to fill the gap left by nuclear power, according to FEPC data. Coal imports dipped by 4.6% in 2012 to 46.6m tonnes. Fionn O'Raghallaigh

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