Japanese coal burn lower in April

Japanese coal-fired power generation edged lower on the year in April amid weaker power demand, strong hydropower and an increase in capacity restrictions across the country's coal fleet.

National coal-fired generation fell by 1.8TWh on the year to 18.3TWh in April, according to data released by the energy and trade ministry (Meti). Less granular but more timely data from Japan's grid operators show a drop in generation from fossil fuels in June, although output may have grown on the year in July.

The decline in April coal use equated to a 661,000t year-on-year drop in consumption to 7mn t, according to Meti figures. Utility stocks also finished the month 1.5mn t down on the year at 7.7mn t, according to the same dataset. The 2017-19 seasonal average for stocks at the end of April is 8.5mn t.

A combination of low power demand, strong April hydro generation and an increase in coal plant unavailability weighed on coal use, with increased competition from LNG also a possible factor.

A total of 18.2GW of Japan's coal fleet was unavailable during April, according to Argus analysis of outage schedules, up from 10.3GW a year earlier. This pared availability to an implied 32GW, which was dispatched at an 80pc load, Argus estimates.

Gas-fired generation was up slightly on the year to 22.3TWh from 22.1TWh in April 2020.

Steep gains in seaborne coal prices this year have eroded the implied cost advantage held by coal plants running on spot supplies over gas plants fed by oil-indexed LNG, creating a stronger incentive to switch between the fuels than in previous years.

And weaker thermal coal imports to Japan coupled with firm LNG receipts in recent months suggest that coal may have lost some ground to gas in the fuel mix. Japan's main utilities increased their coal consumption on the year in the second quarter, according to data collated by Argus, but private utilities and generators have accounted for around 45pc of Japan's national coal burn in the past three years and may have pared output.

In January-April 2021, coal accounted for 44pc of total coal and gas-fired generation, which was down one percentage point on the year but up from 40-43pc shares in January-April in 2017-19.

By Jake Horslen

Japanese coal-fired generation GW

Japanese gas-fired generation GW