Power: Mar 11-15: Prices fall back, warmer climate boosts selling pressure

In the day-ahead market on JEPX (Japan Electric Power Exchange), the 24-hour spot power prices on a weekly average basis for Mar 11-15 delivery pulled back from the previous week in both East Japan and West Japan. Chilly winter climate eased after lower-than-normal temperatures all during the previous week, on top of growing output from photovoltaic generation. Supply-demand fundamentals loosened up, and an overhang in power supply offered into the auction sent spot prices lower. Especially, Kyushu faced higher-than-normal temperatures and sank to hit Yen 0.01 throughout the week except Mar 11.

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 0.37 for Mar 11 delivery, Yen 1.85 for Mar 12 delivery, Yen 1.76 for Mar 13 delivery, Yen 0.57 for Mar 14 delivery and Yen 2.07 for Mar 15 delivery.

In the fuel markets, LNG prices inched down from the previous week. Coal prices also lost ground, but crude oil prices turned higher.

DES Northeast Asia spot LNG prices hovered in the high $8 level per mmBtu for prompt April 2024 arrival as of Mar 14, down moderately by nearly 20cts from the end of the previous week (Mar 8). The market was weighed by looser supply-demand fundamentals, at a time when European natural gas prices lacked upward momentum. The Ministry of Economy, Trade and Industry (METI) announced on Mar 13 that Japan's LNG inventories for power generation stood at 1.83 mil mt as of Mar 10, down 120,000mt from the previous week. The level was below 2.33 mil mt as of end-March last year and the average of past five years at 2.14 mil mt.

FOB Newcastle thermal coal prices in Australia hovered in the high $129 level per ton for April 2024 loading as of the latter half of the week. The level was down nearly $7 from the end of the previous week in reaction to a dip in gas prices.

In the crude oil market, WTI crude for April 2024 stood in the low $81 level as of afternoon on Mar 15 while Brent crude for May 2024 was trading in the low $85 level. Both WTI and Brent were up about $2 from the end of the previous week. Crude prices found support from a drawdown in US crude oil inventories. In addition, the International Energy Agency (EIA) forecast oil supply-demand fundamentals in 2024 would tighten up.

The actual highest price during the week was at Yen 21.86 in Hokuriku for Mar 12 delivery. Meanwhile, the actual lowest price during the week was at Yen 0.01 in Kyushu for Mar 12 delivery, seven areas excluding Tokyo and Chubu for Mar 13 delivery, Kyushu for Mar 14 delivery, and six areas in West Japan for Mar 15 delivery.

By area, the weekly average of the 24-hour spot prices was at Yen 11.82 in Hokkaido, down Yen 1.46 from the previous week, Yen 10.39 in Tohoku, down Yen 1.72, Yen 11.08 in Tokyo, down Yen 1.09, Yen 10.29 in Chubu, down Yen 1.13, Yen 10.09 in Hokuriku, down Yen 1.17, Yen 9.73 in Kansai, down Yen 1.52, Yen 9.70 in Chugoku and Shikoku, down Yen 1.55, and Yen 8.93 in Kyushu, down Yen 1.47.

In the JEPX auction, volumes of offers were 1,031.41 mil kWh on a weekly average basis, up 9.5% from the previous week. Meanwhile, bids on a weekly average basis shrank by 4.7% to 908.41 mil kWh. The weekly average of trade volumes increased by 0.8% to 670.33 mil kWh.

Power demand in nine areas of Japan during Mar 11-15 was a combined XX,XXX.XX mil kWh, up/down XX% from 13,374.24 mil kWh Mar 4-8. The figure was up/down XX% from the corresponding period a year earlier. Demand during Mar 13-17, 2023 after day of week adjustment was 11,334.19 mil kWh.

In the JEPX forward market, no deals were confirmed during Mar 11-15.

Deals reported on TOCOM (Tokyo Commodity Exchange) during Mar 11-15 were as below.

Deals reported on EEX (European Energy Exchange) during Mar 11-15 were as below.

In the fourth week of March, spot power prices are likely to turn a bit higher than the third week. The weather is forecast to be rather cloudy than the third week while the temperatures are expected fall slightly. Supply-demand fundamentals are believed to tighten up and lift spot prices. But the temperatures will not drop remarkably, and spot prices are unlikely to exceed Yen 20 for the lack of upward momentum.