Japan's Tepco buys 100,000 mt LPG in August due to heat wave: source

Tokyo (Platts)--22Aug2013/430 am EDT/830 GMT


Japan's Tokyo Electric Power Company, or Tepco, has bought a total 100,000 mt of LPG in August to meet power demand for air conditioning during the current heat wave, its second consecutive monthly purchase, a source close to the matter told Platts Thursday.

Tepco's LPG purchases for August matched its July volumes, when the company bought the fuel for the first time in the current fiscal year that begun in April.

The utility is still unclear about its estimated LPG demand for September, as peak power demand typically fades in the month, the source said.

Article continues below...


Platts Commodity Week
September 2-4, Mumbai, India
Commodity Week, Mumbai
Platts European Gas & Power Trading 2013 Conference

Mumbai is a free event where you can hear from our senior editors, analysts and news reporters about the most important stories they see unfolding in the year ahead.

Register for Platts European Gas & Power Trading 2013 Conference


The high utility demand in July and August had also prompted increased import activity among Japanese trading houses, which had been limiting their purchases since late last year and met their winter demand by drawing down stockpiles due to the market's persistent backwardated structure, in which the prompt month is higher than the forward months.

Japan's purchases in recent months, together with healthy demand from Taiwan, Indonesia and Thailand, have helped to drive up regional LPG prices since end May.

Prices of propane cargoes for delivery along the major Singapore-Japan route hit a near six-month high August 19 at $904/mt, and butane at $929/mt. On Wednesday, propane had eased to $896/mt and butane to $921/mt, Platts data showed.

Tepco typically makes prompt purchases of LPG from domestic suppliers when there an uptick in demand for power generation.

Japan is in its July-September summer peak power demand season, when the weather influences demand for crude, fuel oil, LPG and LNG used for thermal power generation.

On August 9, Tepco recorded 50.93 GW of power demand, the highest this summer against its supply capacity of 54.92 GW in the day, according to the company. It was also the highest daily power demand since the devastating March 2011 earthquake, a company official said.

In August, Tepco's daily power demand has been mostly above 40 GW. On Monday, Tepco had 49.78 GW of power demand, marking the highest since August 9, according to the company.

Tepco has also raised its estimated use of crude and fuel oil for thermal power generation to more than 600,000 kiloliters (122,000 b/d) in August, double from an earlier plan, the source said.

Earlier, Tepco had estimated its oil use in August to be 300,000 kl, the source said. But this has been raised due to the heat wave.

ABOVE-AVERAGE TEMPERATURE FORECAST

According to a month-long weather forecast issued August 16 by the Japan Meteorological Agency, the Kanto/Koshin region, which includes Tokyo, is likely to see average or above 30-year average temperatures over August 17-September 16.

Tepco has four propane storage tanks at its Anegasaki plant, comprising two 45,000 kl (45,000 cubic meter) tanks and two 60,000 kl tanks, the company said. It also has four 40,000 kl butane storage tanks at Anegasaki.

Tepco has had to increase power generation using fossil fuels -- coal, crude, fuel oil and LNG -- following the March 11, 2011, earthquake that caused an automatic shutdown of its Fukushima-1 (Daiichi) and Fukushima-2 (Daini) nuclear power plants with a combined capacity of 9 GW in Japan's northeast.

Tepco lost the last of its nuclear output on March 26, 2012, when it shut its remaining 1.356 GW No. 6 nuclear reactor at the Kashiwazaki-Kariwa plant for scheduled maintenance. It remains unclear when Tepco will be allowed to restart any of its nuclear reactors.

--Takeo Kumagai, takeo.kumagai@platts.com

--Ramthan Hussain, ramthan.hussain@platts.com

--Edited by Wendy Wells, wendy.wells@platts.com

Platts Email




© 2014 Platts, McGraw Hill Financial. All rights reserved.