In the day-ahead market on JEPX (Japan Electric Power Exchange), the 24-hour spot power prices on a weekly average basis for Jan 29-Feb 2 delivery eased back from the previous week in both East Japan and West Japan. The market was capped by a combination of relatively high temperatures, ample power supply and softer fuel prices.

On Jan 31, a fire struck JERA's Taketoyo coal-fired power station, forcing the utility to shut down the 1,070MW No5 unit during normal operation. JERA detected the fire occurred at the belt conveyor that delivers coal and woody biomass fuels, and there were no inquiries. The unit is a state-of-the-art facility that just launched commercial operation in August 2022. A source at a power producer and supplier said, "Considering the fact that a fire broke out at such a brand-new facility, the impact will not be so small. Even if the fire didn't give any direct damage on the generation facility, it will take some time to resume operation."

In Tokyo and Kansai, the key areas in East Japan and West Japan, the 24-hour average posted a difference in favor of the East by Yen 0.76 for Jan 29 delivery, Yen 0.41 for Jan 30 delivery, Yen 0.22 for Jan 31 delivery, Yen 0.19 for Feb 1 delivery, and Yen 0.29 for Feb 2 delivery.

In the fuel markets, LNG prices edged up from the previous week, but crude oil turned lower. Coal prices leveled off.

DES Northeast Asia spot LNG prices hovered in the high $9 level per mmBtu for prompt March 2024 arrival as of the latter half of the week (Feb 1), up moderately by about 30cts from the end of the previous week (Jan 26). Supply-demand fundamentals remained almost stable, a pickup in buying activities by Chinese end-users lent support to the market. The Ministry of Economy, Trade and Industry (METI) announced on Jan 31 that Japan's LNG inventories for power generation stood at 2.16 mil mt as of Jan 28, down 330,000mt from the previous week. The level fell below 2.39 mil mt as of end-January last year, but still exceeded the average of past five years at 1.91 mil mt.

FOB Newcastle thermal coal prices in Australia hovered at $117 per ton for March 2024 loading as of the latter half of the week. The level was almost intact from the end of the previous week. The market was little moved for the lack of fresh incentives.

In the crude oil market, WTI crude for March 2024 stood at slightly above $74 as of afternoon on Feb 2 while Brent crude for April 2024 was trading at slightly below $79. Both WTI and Brent were down nearly $4 from the end of the previous week. Crude prices were pressured down by concerns over an economic slowdown in China combined with a buildup in US crude oil inventories.

The actual highest price during the week was at Yen 13.22 in East Japan for Jan 29 delivery. Meanwhile, the actual lowest price during the week was at Yen 5.00 in Hokkaido and Tohoku for Feb 2 delivery.

By area, the weekly average of the 24-hour spot prices was at Yen 9.03 in Hokkaido, down Yen 0.53 from the previous week, Yen 9.07 in Tohoku, down Yen 0.49, Yen 9.92 in Tokyo, down Yen 1.91, Yen 9.79 in Chubu, down Yen 2.02, 9.63 in Hokuriku, down Yen 2.00, Yen 9.55 in Kansai and Chugoku, down Yen 2.06, and Yen 9.55 in Shikoku and Kyushu, up Yen 2.05.

In the JEPX auction, volumes of offers were 1,201.77 mil kWh on a weekly average basis, up 8.2% from the previous week. Meanwhile, bids on a weekly average basis waned by 4.8% to 909.28 mil kWh. The weekly average of trade volumes decreased by 2.7% to 706.54 mil kWh.

Power demand in nine areas of Japan during Jan 29-Feb 2 was a combined 13,578.92 mil kWh, down 4.9% from 14,285.75 mil kWh Jan 22-26. The figure was down 7.6% from the corresponding period a year earlier. Demand during Jan 30-Feb 3, 2023 after day of week adjustment was 14,692.16 mil kWh.

In the JEPX forward market, no deals were confirmed during Jan 29-Feb 2.

Deals reported on TOCOM (Tokyo Commodity Exchange) during Jan 29-Feb 2 were as below.

Deals reported on EEX (European Energy Exchange) during Jan 29-Feb 2 were as below.

In February as well, spot power prices are believed to have limited upside room amid prospects for ample supply and relatively warm temperatures. Meanwhile, clouds are expected to grow in the second week compared with the first week, so that the outlook for tighter solar supply will push up day time prices. In the begging of the week, snowfall is expected even in Kanto, and freezing climate is likely to serve as a bullish factor. As a result, spot prices will likely track an upward trend. But gas prices lack upward momentum on top of stable power supply, so that spot power prices will also have limited upside potential.