LNG Analytics: Japan LNG-to-power stable on displaced coal output

• Japanese power demand falls below last year’s weak base
• LNG storage demand persists as restocking falters
• Coal-fired output to decline by 11% on 2023

SINGAPORE (ICIS)–Despite weak power demand and high nuclear availability, Japanese LNG-to-power demand looks stable in April, with displacement primarily hitting coal-fired output.

LNG storage also remains below average, increasing the likelihood of higher imports in the second quarter compared to the same period last year.

Power demand: A pattern of weak power demand has returned, with the first two weeks of April showing consumption close to flat on year, but down 7% from the 2018-2022 average.

Data from the latest week is more bearish, with demand falling below last year for the first time since February.

Storage: LNG storage for power generation started to recover in early April but remained flat on week by 14 April, with stocks at 1.61m tonnes.

With weak power demand, the storage rebuild is likely to be a key driver of year-on-year import growth in the second quarter. Inventory is expected to rebound by about 0.8m tonnes by mid July.

Nuclear: Kansai Electric’s 870MW Takahama 4 is returning from regular maintenance on 26 April, after a three-week extension caused by damage to its steam generator.

Nuclear generation is forecast to remain higher year on year, by about 20% in May and 12% in June.

But despite potential restarts of idled reactors in Chugoku and Tohoku in the third quarter, nuclear output is likely to fall close to flat in July and down on 2023 in August.

Coal: Coal plant availability is set to dip 8% year on year in April, with coal-fired output falling further because of weak utilisation, currently hovering around 60% of available capacity.

As such, coal-fired generation could decline by about 11% year on year in April, counteracting the impact of bearish drivers on LNG.

A restart date is currently unavailable for the following coal plants: Hokuriku Electric’s 500MW Nanao-Ota 1 and 700MW Nanao-Ota 2 – offline since the earthquake on 1 January – JERA’s 1070MW Taketoyo 5 – after a fire incident on 31 January, and JERA’s 700MW Hekinan 2, offline since 29 March.

For more information on ICIS LNG supply & demand forecasts contact joachim.moxon@icis.com