LNG stocks at Japan’s power utilities rise

Market: Electricity, Natural gas
02/04/25

LNG inventories at Japan's main power utilities increased during the week to 30 March, as warmer weather reduced electricity demand for heating purposes and limited gas-fired generation.

The utilities held 2.24mn t of LNG on 30 March, up by 22pc from a week earlier, according to a weekly survey by the trade and industry ministry Meti. This was higher by 51pc compared with 1.48mn t at the end of March 2024 and up by 10pc against 2.03mn t — the average end-March stocks over 2020-24.

A seasonal rise in temperatures weighed on power demand, which fell by 12pc on the week to 87GW across 24-30 March, according to the Organisation for Cross-regional Co-ordination of Transmission Operators (Occto). This resulted in a 24pc fall in gas-fired output to an average of 24GW during the period, the Occto data showed. Coal- and oil-fed generation also fell by 14pc to 23GW and by 21pc to 409MW respectively in the same period.

The lower demand has created extra supplies to be sold on the wholesale market. This has weighed on day-ahead prices on the Japan Electric Power Exchange (Jepx) and worsened generation economics for the country's thermal power plants.

Margins at a 58pc-efficient gas-fired unit running on oil-priced LNG supplies fell into negative territory, with the spark spread averaging at a loss of -¥2.28/kWh ($15.22/MWh) across 24-30 March, compared with the previous week's profit of ¥0.84/kWh. The 58pc spark spread using spot LNG widened the deficit, with the margin averaging at a loss of -¥3.79/kWh against the previous week's -¥0.80/kWh, based on the ANEA — the Argus assessment for spot LNG deliveries to northeast Asia.

Coal remained competitive in Japan's merit order. But the dark spread of a 40pc-efficient coal-fired unit also fell by 64pc on the week to an average of ¥1.63/kWh over 24-30 March, based on Argus' spot coal and freight assessments.

By Motoko Hasegawa

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