An unusually strong late summer stockdraw has led us to revise up our forecast for Q4 19 Japanese LNG imports by 0.2 Mt, to 21.1 Mt. Brisk imports over the next two months should push LNG stocks back to the three-year average by year-end, despite lower available nuclear capacity boosting power sector gas demand. We have revised up our forecast for summer 2020 power sector gas demand based on the planned shutdown of both 0.9 GW Sendai reactors, but we still expect gas into power next summer to be lower y/y based on higher aggregate nuclear availability.
We forecast Japanese LNG imports will rise by 1.1 Mt y/y (6%) in Q4 19. Our balances show that an unusually hefty August stockdraw of about 1.4 Mt moved LNG stocks 0.9 Mt below the three-year average, with stocks having been well above average every month since August 2018. However, there is slight downside risk to our Q4 19 LNG import forecasts if September-October gas demand was dented by typhoon activity. October’s Typhoon Hagibis—one of the worst storms to hit Japan in 60 years— led to widespread power outages for a few days.
We now expect LNG stocks to finish December around 4.4 Mt, broadly on par with the three-year average but down by 0.9 Mt y/y.
We expect Q1 20 power sector gas demand to rise by 0.4 Mt y/y, with upside potential if the 0.87 GW Takahama 4 nuclear unit, currently offline for planned maintenance, remains on outage throughout the quarter. Japan’s nuclear maintenance schedule was revised on 17 October, with the December return date for the Takahama 4 unit removed from the schedule. Takahama units 3 and 4 (each 0.87 GW) face an H2 20 deadline to comply with counterterrorism measures or shutdown until compliance is met. Our current forecasts assume that Takahama 4 will return to service in Q1 20, but we note the risk that an extended shutdown is possible. Kyushu Electric Power said this month that it will shut down both 0.89 GW Sendai units 1 and 2 in H1 20 to perform compliance-related works (see E-mail alert: Japanese nuclear shutdowns boost Q4 20 gas demand, curb summer 2020 power sector gas demand losses, 7 October 2019). A full winter shutdown of Takahama 4 would boost Q1 20 power sector gas demand by roughly another 0.3 Mt.
Sendai shutdowns will boost summer 2020 gas into power
The planned March and May shutdowns of Sendai units 1 and 2 respectively, announced earlier this month, led us to revise up our forecast for summer 2020 power sector gas demand by 1 Mt, to 23.9 Mt. However, higher aggregate planned nuclear availability should still leave summer 2020 power sector gas demand down by 1.1 Mt y/y.
|Fig 1: Japan LNG storage and forecast, Mt||Fig 2: LNG imports and forecast, Mt, y/y|
|Source: METI, Jodi, Energy Aspects||Source: METI, Energy Aspects|