Tokyo Electric coal purchase to triple this year: Report
Tuesday, December 16 2003 - 01:07 AM WIB
Rising coal consumption by Tokyo Electric and other Japanese utilities may worsen a shortage of the power-station fuel in Asia partly caused by surging demand in China, which is curbing exports. Coal purchases by Japan's 10 regional power companies have gained two-fifths in the last five years.
``At a time when the supplies are becoming tighter, and with China pulling back from the market, incremental demand from Japan will play a bigger part than normal'' in further boosting coal prices, said Glyn Lawcock, a Sydney-based analyst at UBS AG who tracks Australian coal exporters, the world's biggest.
China, the world's second-biggest coal exporter, plans to ban increases in overseas shipments to ensure domestic electricity stations don't run short of the fuel, a government official said this month.
The price of coal used in power stations exported from Newcastle has surged 41 percent in the past quarter to $35.90 per metric ton, according to Platts data. Lawcock at UBS expects the average price of coal under annual contracts may rise at least 8.5 percent to about $29 per ton in 2004, from this year, with chances of ``further upside.''
Tokyo Electric's coal purchases rose to 1.13 million metric tons in the first eight months of this fiscal year from 441,376 tons in all of the previous fiscal year, said Hiroyuki Kuroda, a Tokyo Electric spokesman. Last fiscal year's coal consumption was the first by the utility since 1997.
Last week, the company started commercial power-generation at the 390 billion yen ($3.6 billion), 1,000-megawatt, No. 1 unit of its Hitachinaka power station after a year of testing. The plant is its first in 30 years to be fired solely by coal.
The plant will help diversify Tokyo Electric's fuel sources, giving it a ``better energy mix,'' the company said in a statement. Also, coal is cheap and available worldwide, helping Japan reduce its dependence on oil imported from the Middle East, it said.
Another Tokyo Electric plant, the 600-megawatt, Hirono No. 5 unit, will start generating power for commercial use in July.
Coal imports by other Japanese utilities are surging as well, benefiting coal producers in Australia, China and Indonesia, the Asia-Pacific region's biggest coal suppliers.
Tokyo Electric agreed to buy coal from Rio Tinto Plc's Australian mines for the Hitachinaka and Hirono power plants, Kuroda said.
Coal purchases by Japanese utilities have risen every year for at least the past five years.
Japan's 10 regional utilities bought a total 21.8 million tons of coal in the six months ended Sept. 30, compared with a total 18.2 million tons purchased in the same period last year. Coal purchases by those 10 utilities surged 41 percent in five years to 40.8 million tons in the year ended March 31.
Japan's power companies have started new coal-fired plants ``regularly'' in the past five years after a drop in coal prices since the late 1990s made the fuel cheaper than other fossil fuels such as natural gas and oil, said Atsushi Aoki from the coal projects department of the state-run New Energy and Industrial Technology Development Organization in Tokyo.
Aoki said the government expects coal consumption by Japanese power companies to grow at the same pace, or perhaps even a bit faster, in the next seven years as in the past five.
Japan's total imports of coal, including coking coal used in steelmaking furnaces, rose 7.7 percent to 84.8 million tons, worth 381 billion yen ($3.5 billion) in the six months ended Sept. 30, according to the nation's finance ministry.
Meanwhile, growth in the share of cleaner-burning natural gas and nuclear power as a fuel source for Tokyo Electric's power generation has stalled.
Rising oil prices that determine the price of liquefied natural gas burnt in power plants increased fuel costs, discouraging growth in natural gas use. A series of nuclear safety scandals at Tokyo Electric and other utilities led to the forced shutdown of reactors for safety checks.
Natural gas's share stagnated at 43 percent for a second fiscal year ended March 31, after surging from 29 percent two decades ago. Nuclear power's share has been unchanged at about 29 percent for four years, after rising from 17 percent two decades ago.
``The nuclear scandal caused a temporary increase in the consumption of coal in the Honshu area this year,'' Aoki said. Honshu, Japan's main island, is home to the country's biggest nuclear reactors. ``Coal holds a dominant position within the fossil fuels'' at Japan's power companies.(*)