ICIS ANALYSIS: Extreme summer heat in Japan threatens to beat last summer’s record

• LNG-to-power demand surges in early July
• Coal availability improving but remains lower on year
• Temperatures retreat from peak but high temperatures still expected

SINGAPORE (ICIS)–Record-high temperatures have pushed up power demand, which could prompt Japanese power utilities back in the spot market for additional LNG volumes.
The weather outlook indicates the hottest temperatures may have passed for now, after peaking at 36C in Tokyo on 8 July. However, high probability of above-average temperatures remains through to the first half of August.
A sustained heat wave would like drain LNG storage and trigger restocking demand in the autumn. Preliminary generation data for the first ten days of July indicates higher gas-fired generation compared to last year and relatively sluggish coal dispatch.

POWER DEMAND
An ongoing heatwave pushed power consumption in the first week of July up by 5% compared to the same period last year and 6% from the 2018-22 average.
The increase in demand was even more pronounced in the first half of the current week, at 10% above the 2018-22 average. The current weather forecast shows closer-to-average temperatures in the next few days before pushing higher again later in the month.

STORAGE
LNG storage for power generation remains relatively stable but fell below 2m tonnes for the first time since April in the week ended 7 July.
At 1.98m tonnes, this is down by 0.1m tonnes compared to 9 July 2023, and still in average territory. However, further pressure could increase the need for replacement volumes in late summer and autumn.

NUCLEAR
Shikoku Electric’s 890MW Ikata 3 is scheduled to go offline for maintenance from 19 July to 30 September. Kansai Electric’s 826MW Takahama 1 and Kyushu Electric’s 890MW Sendai 1 are scheduled to return from maintenance in late August.
Nuclear availability is forecast 14% lower on year in August.

COAL
Coal plant availability has been improving since June but is still likely to fall 1% short in July compared to the same month last year.
Tohoku Electric’s 1GW Haramachi 2 is now scheduled to restart on 24 July, five days earlier than previous scheduled.