A spike in Japan's thermal coal imports in April was more a short-term push to accommodate new coal-fired power generation capacity coming online rather than any sign of a sustained long-term trend, according to a report by Macquarie Commodities Research.
Japan imported 7.8 million mt of thermal coal in April, up 10% from the corresponding 2012 period, Ministry of Finance data released last week showed.
The Macquarie report, issued Monday, said the ongoing commissioning of Tokyo Electric's Hirono and Hitachinaka coal-fired plants will require additional fuel, while rival utility Tohoku's Haramachi plants which were disabled by the March 2011 tsunami have also recently come back online.
"Given there is very little new capacity addition planned for the coming years, we would caution in projecting April's imports into a discernible step change in Japan's demand," the report said.
While Japan's thermal coal imports in the first quarter of 2013 represented the second highest Q1 import volume in history, they were actually down 2.5% on 2012, so "part of the sequential lift would seem to be some catch-up purchases," the report said.
It said that despite coal's advantage over LNG on a pure economic basis in Japan's energy mix, "LNG is set to make up 75% of new generation capacity while coal's base load will grow only slowly."
It added that South Korea is likely to be a larger driver of incremental coal trade into the medium term given its desire to increase coal capacity by up to 50% by 2020.
Macquarie kept its 2013 and 2014 thermal coal price forecast for Australian Newcastle FOB 6,000 kcal/kg NAR at $90/mt and $94/mt respectively, saying it saw limited downside to Chinese or international prices over the next 3-6 months.
Year-to-date 90-day spot prices for Newcastle 6,300 kcal/kg GAR coal -- which has a slightly higher calorific value than 6,000 kcal/kg NAR -- have so far averaged $90.92/mt, according to Platts assessments.
