Coal restriction easing boosts South Korean coal market

  • Market: Coal, Electricity
  • 15/10/21

Seoul has lifted voluntary restrictions across the state-owned Kepco coal fleet for the autumn period, boosting the demand outlook for spot coal in South Korea.

Concurrently, one of the state-owned utilities is reportedly affected by a force majeure declared by Russian producer Suek, after a fire hit its Vanino Daltransugol terminal this week, further tightening availability.

The South Korean government and state-owned utility Kepco reportedly came to an agreement on 14 October to lift voluntary restrictions across the country's coal-fired fleet, although they will still implement the seasonal fine-dust management measure during December-March, according to sources familiar with the matter.

Although gas remains competitive versus coal in the South Korean power sector currently as a result of the prevalence of oil indexation in state-owned Kogas' LNG import costs, firm gas demand has led Kepco utilities to become increasingly exposed to the spot LNG market and associated high prices, which has driven up costs, while the tight restrictions on coal-fired capacity have limited coal-switching flexibility. This has led to mounting pressure to ease the restrictions.

The government has not made an official announcement on the relaxation, but the latest plant maintenance schedule published by the Korea Power Exchange shows that the start date for coal-fired units that are currently under the voluntary restrictions was brought forward this week. Based on the current schedule, no coal units are scheduled to go off line for voluntary restrictions after 17 October, bringing average restrictions across the whole of October to 1.7GW, according to Argus analysis. By comparison, based on last week's schedule, around 4.5GW of Kepco's coal-fired capacity was scheduled to be unavailable in October.

October coal availability

Kepco's coal availability is now scheduled to average around 24GW in October, up from 22.9GW average availability based on last week's schedule.

This 1.1GW rise in coal availability is equivalent to 235,000t more NAR 6,000 kcal/kg coal burnt across the month in 40pc-efficient plants at an 80pc load factor, Argus calculations show.

The plant maintenance schedule is updated every week, but it is unlikely that the government will bring back the restrictions as utilities are already facing difficulties procuring coal amid frequent schedule changes, according to a source from the state-owned utilities.

Softer restrictions across Kepco's coal-fired units should lift utility spot coal demand, while one of the utilities was reportedly affected by the force majeure declaration at the Daltransugol terminal, tightening the outlook for spot market availability. The utility was scheduled to receive 155,000t of thermal coal from the Vanino port in October, but only 110,000t were loaded owing to disruption caused by a fire, according to a source familiar with the matter.

Fellow state-owned Korea Western Power (Kowepo) closed a five-year term tender today, procuring a Capesize cargo of NAR 5,800 kcal/kg at around $215/t fob Newcastle on a NAR 6,080 kcal/kg basis for January 2022 loading.

Argus assessed NAR 5,800 kcal/kg coal at $228.64/t cfr South Korea and $208.81/t fob Newcastle, up by $13.66/t and $22.90/t on the week, respectively.

Headwinds for Japanese coal demand outlook

Firmer spot demand expectations across the Asia-Pacific region, a market already buoyed by acute coal shortages in China and India, continued to boost implied landed prices for Japan this week.

Despite the regional strength, firmer nuclear availability and relatively competitive oil-indexed LNG prices are weighing on the demand outlook for coal-fired generation in Japan, although upside risks remain in the event of La Nina weather.

Japanese monthly nuclear availability is scheduled to increase by 4.4GW on the year to 7.8GW on average during October-March, while a 1.5GW year-on-year rise in nuclear availability dented coal-fired power generation by 317GWh in June, despite a 1.3TWh increase in overall power demand.

Combined coal and gas-fired output dropped by 776.3GWh on the year to 43.6TWh in June amid firmer nuclear availability, but oil-fired generation increased by 33pc, or 245.2GWh, on the year to 997.2GWh, as rallies in spot LNG prices incentivised gas-to-oil fuel switching.

Theoretical margins for the most economical 58pc-efficient gas-fired units in Japan averaged minus 11,158 yen/MWh during 8-14 October, based on Argus' des northeast Asia spot LNG assessment and the day-ahead system price from the Japan Electric Power Exchange.

Seven-day avg. Korean peak power demand GW

Weekly Kepco coal-fired availability GW

Japanese coal-fired generation GW

Seven-day avg Japanese power demand GW

Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
28/03/24

Crane barge arriving at Baltimore bridge tonight

Crane barge arriving at Baltimore bridge tonight

Houston, 28 March (Argus) — The first major piece of equipment capable of beginning to clear the blocked Port of Baltimore, Maryland, is expected to arrive onsite tonight. The Chesapeake 1000 crane barge, capable of lifting 1,000 short tons with its a 231ft-long boom, is expected to arrive at the site of the collapsed Francis Scott Key Bridge near Baltimore at 11pm ET on 28 March, the US Coast Guard (USCG) told Argus . Both the crane and the tug pulling it, Atlantic Enterprise , are owned by Donjon Marine. It is currently the only crane on route to the collapsed bridge, the USCG said. There is no official timetable for the reopening of the port after the Interstate 695 highway bridge over the Patapsco River was hit in the early hours of 26 March by a container ship and collapsed, with the debris and ship blocking the waterway. The operator of the ship, Maersk, has contracted with marine salvage company Resolve Marine to refloat the vessel and remove it from the area, according to the USCG. It is not clear who has contracted for the Chesapeake 1000. Despite the inbound crane, it could take weeks or even months to clear debris and reopen the waterway under the collapsed bridge according to a engineering professor at the nearby Johns Hopkins University. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read more
News

'Weeks, months' to reopen Baltimore waterway: professor


28/03/24
News
28/03/24

'Weeks, months' to reopen Baltimore waterway: professor

Houston, 28 March (Argus) — It could take weeks or even months to clear debris and reopen the waterway under the collapsed Francis Scott Key Bridge in Baltimore, Maryland, according to a engineering professor at the nearby Johns Hopkins University. As of Wednesday, there was no official timetable for the reopening of the Port of Baltimore after a major highway bridge over the Patapsco River was hit in the early hours of 26 March by a container ship and collapsed, with the debris and ship blocking the waterway. "I'd be shocked if it's weeks, but I don't think it'll take even a year" to clear the waterway, structural engineer and Johns Hopkins professor Benjamin Schafer said Wednesday. He expects the rebuild of the bridge to take significantly longer. "I've lived through quite a few civil infrastructure projects and they're rarely less than 10 years. So I think that's what we're looking at," Schafer said. He noted that it took five years to build the original Francis Scott Key Bridge and seven years to repair the Sunshine Skyway Bridge in Tampa Bay, Florida, after a similar collapse in 1980. Still, "this is definitely not a national supply chain crisis," John Hopkins operations management professor Tinglong Dai said Wednesday. "The effect will be mostly local, mostly minimal and mostly temporary." The bridge collapse and port closure is also unlikely to trigger a global supply chain crisis, he said. The Port of Baltimore is an important but "niche" port specializing in automobile imports and exports, Dai added. "The supply chain has evolved...I have already seen a lot of rerouting happening." Automakers started adjusting their supply routes away from the top port for US vehicle imports the day of the collapse, including General Motors, Ford and Mercedes-Benz. Baltimore is also a major port for coal exports, which may start to shift to terminals to the south in Hampton Roads, Virginia. Freight rates for ships that carry coal could see increases in global markets Other commodities like asphalt and caustic soda that move through the port will see challenges, while organic agriculture imports may see less problems due to seasonal flows. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Stalling climate finance an energy security risk : WRI


28/03/24
News
28/03/24

Stalling climate finance an energy security risk : WRI

London, 28 March (Argus) — The "best bet" to achieving global energy security is through mitigation funding and multilateral cooperation, according to the World Resources Institute (WRI). WRI highlighted that governments are funding more domestic renewable energy projects but have increased oil and gas production in the name of "energy security" at home in the years following the Russia's invasion of Ukraine. The recent rebrand of energy transition funding to energy security funding has allowed some developed nations to justify domestic oil and gas licences and drag their feet on multilateral financial commitments. This is causing "real worry" among climate-vulnerable developing nations, WRI chief executive Ani Dasgupta said. He said that although the initial "shock" to the world's energy markets after the invasion of Ukraine "quickly went away", it has triggered "real worry among poorer countries that when push comes to shove, it won't be an even game, or have a fair outcome." Developing countries have long complained about the lack of access to climate funding. Richer nations have only recently met the $100bn/yr target in climate finance to developing countries agreed in 2009, while discussions on setting a new climate finance goal for 2025 at Cop 29 in Baku in November could prove difficult. President of the Republic of Congo (Brazzaville) Denis Sassou-Nguesso said last year that the $100bn/yr in climate financing to developing countries promised by rich countries "never reached us", adding that the annual UN Cop climate conferences have become little more than a talking shop. "Just after the invasion of Ukraine, every country started to think about energy security," Dasgupta said. "In theory, good things could have happened, countries could have concluded that their best bet to getting energy security is by going renewable". But it was not the case in key consumer countries or regions, Dasgupta pointed out. China bought the majority of Russian gas following the EU's withdrawal, he said, and has since upped production at coal-fired power stations despite an "extraordinary" acceleration towards renewables set for 2023-28, according to Paris-based energy watchdog IEA . In Europe, the UK and Norway continue to award new oil and gas licences . "In the US, the fossil fuel lobby argues that the best route to energy security is to invest more in fossil fuels". But the best route is to invest in more renewables, he said. "Even if the US produces a large amount of oil and gas, it is still a traded commodity, and so you have to pay a price for it that is set globally." The US special presidential co-ordinator for energy security Amos Hochstein has also suggested in September that a widening climate finance gap could ultimately threaten global security. "We have seen the percentage of dollars spent on the energy transition outside the OECD, in developing and middle income countries actually go down instead of up…" By Madeleine Jenkins Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Japan’s Renova starts Miyagi biomass power plant


28/03/24
News
28/03/24

Japan’s Renova starts Miyagi biomass power plant

Tokyo, 28 March (Argus) — Japanese renewable power developer Renova started commercial operations today at its 75MW Ishinomaki Hibarino biomass-fired power plant in northeast Japan's Miyagi prefecture. The power plant is designed to consume an undisclosed volume of wood pellets and palm kernel shells (PKS) to generate around 530 GWh/yr of electricity. Renova originally targeted to start up the power plant in May 2023 but postponed the start-up multiple times. Renova has been forced to delay the start-up schedules at several of its power plants. It previously targeted to begin commercial operations of the 75MW Omaezaki biomass power plant this month but postponed it to July, as the final adjustment of boiler and turbine units is taking longer than expected. It delayed the launch of the 74.8MW Tokushima Tsuda biomass power plant in September before it began commercial operations in December 2023 . Japan imported 1mn t of wood pellets during January-February, up by 14pc from the same period in 2023, according to the finance ministry. PKS purchases fell by 24pc to 466,186t. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Hampton Roads may have space for Baltimore coal exports


27/03/24
News
27/03/24

Hampton Roads may have space for Baltimore coal exports

Houston, 27 March (Argus) — Terminals in Hampton Roads, Virginia, may have some available capacity to take rerouted coal shipments from Baltimore, Maryland, despite increasing exports from a year earlier for the seventh consecutive month in February. Coal loadings at Hampton Roads reached an estimated 3.31mn short tons (st) (3mn metric tonnes) last month, rising 7.8pc from February 2023, according to the Virginia Maritime Association. Still, historic Hampton Roads export data going back to 1993 showed that combined shipments from the three terminals in the region peaked at 5.48mn st in April 2012, which is nearly 66pc higher than last month's exports. This suggests that Hampton Roads terminals may have capacity to load additional coal volumes that were originally booked to ship out of terminals upstream from the Francis Scott Key Bridge in Baltimore, which collapsed on Tuesday morning, closing the Port of Baltimore for an indefinite period of time. The two Baltimore coal terminals cut off by the bridge collapse, Consol Energy's Consol Marine Terminal and CSX's Curtis Bay Coal Piers, have a combined export capacity of about 34mn st. Railroad Norfolk Southern (NS), which operates the Lamberts Point terminal at Hampton Roads, said today it is working with impacted international customers and port partners to "provide alternate routing solutions." "Ports on the east coast are resilient and have the capacity to serve the flow of freight," NS said. Lamberts Point terminal handled 1.19mn st of coal in February, a 20pc jump from February 2023. Despite this increase, that is still down from the 2.18mn st exported from the terminal in April 2012. Dominion Terminal Associates (DTA) exported 1.24mn st of coal in February from the Hampton Roads area, which is down 30pc from April 2012, while exports from the nearby Pier IX terminal were down 53pc to 727,023st last month. DTA's co-owners, Alpha Metallurgical Resources and Arch Resources, and Pier IX's owner Kinder Morgan all did not respond for immediate comment. By Anna Harmon Hampton Roads coal exports in 2012 st Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more