Very mild weather and weak power sector gas demand led Japanese LNG imports to post another hefty y/y loss in January, and the y/y decline in imports is set to increase again in February. LNG imports totalled 7.55 Mt in January, down by 0.72 Mt y/y. With unseasonably mild weather expected to persist well into March, we have revised down our forecast for Q1 19 LNG imports—we now expect a 2.1 Mt y/y drop in LNG takes, compared to a 1.83 Mt fall previously. Stocks are set to finish winter 0.16 Mt higher y/y, further curbing imports over summer.
Our current balances put LNG stocks up by 0.2 Mt y/y at the end of January 2018, at a touch under 3.3 Mt. We have been bearish for some time on Japanese LNG imports owing to mild weather in winter 2018/19 and higher nuclear availability y/y. Forecasts for HDDs to stay low in February-March have reinforced our bearish view. Mild weather is set to continue through the first week of March, with forecast 14-day HDDs down by 28% y/y. That removes most of the potential weather risk for winter 2018-19.
A total of 9.1 GW of Japan’s total nuclear capacity is currently operational (+5.6 GW y/y), with no additional reactors scheduled to come back online in 2019. However, available nuclear capacity will ease this summer, starting in April, owing to planned nuclear maintenance. Late summer is likely to be especially heavily affected, with four different units scheduled to be offline for parts or all of August.
A further 6.25 GW of nuclear capacity has received restart approval from the Japanese Nuclear Regulation Authority (NRA) but is currently undergoing safety enhancement and will require local government approval before being allowed to restart. Potential restart dates at three of these reactors—the 0.83 GW each Takahama units 1 and 2, and the 0.83 GW Mihama unit 3—were pushed back by around six months to May 2020, January 2021 and July 2020, respectively. We note that the restarts at the two Takahama units are seeing opposition from the local government, so restart dates could slip further. Additionally, there is 11.6 GW of nuclear capacity currently under review by the NRA. However, only 2.5 GW of this capacity is reported to have demonstrated acceptable levels of local seismic stability. One of these sites is the 0.8 GW Shimane U2 nuclear power plant, where safety measures are scheduled to be completed by April 2020, allowing it to possibly come online in late 2020. The plant is also applying to be allowed to restart construction on its 1.6 GW Shimane U3 reactor.
Chiba Sodegaura Energy—a joint venture formed between Kyushu Electric Power (Kyuden), Tokyo Gas and oil refiner Idemitsu—has scrapped plans to build two 1 GW coal and biomass generation units in the city of Sodegaura. Japanese regulations stipulate that new thermal plants must achieve specific best in class fuel efficiencies, meaning new coal units need a base efficiency of 45%, which is higher than the 40% efficiency of the proposed coal-biomass plant. Kyuden and Tokyo Gas are instead now considering building a 2 GW gas-fired power plant on land adjacent to Tokyo Gas’s 30 Mtpa Sodegaura LNG terminal.