(EnergyAsia, June 27 2011, Monday) — The following is an edited extract from the latest ‘Australian Commodities June quarter’ report by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
“The Institute of Energy Economics Japan (IEEJ) has revised upward its forecast of Japan’s oil consumption for the year to March 31 2012 by 20,000–30,000 b/d (or around 0.5% of total consumption) as a result of the earthquakes and tsunami on March 11 2011.
The IEEJ now forecasts oil consumption in Japan to be around 140,000 to 160,000 b/d higher in FY 2011 than in the previous fiscal year. This is based on the expectation of reduced electricity generation from nuclear power and the restarting of oil-fired power stations, such as Tokyo Electric Power Company’s Hirono thermal power plant in Fukushima, to meet demand. Japan will also import a significant proportion of its refined oil product requirements, as around 30 per cent of its crude processing capacity was shut down after the earthquakes and tsunami.
Although three of the six tsunami-damaged refineries have resumed production, 612 500 b/d, or 13%, of capacity remains offline. JX Nippon Oil and Energy Corp expects to resume production at its 252,500 b/d Kashima refinery soon while its 140,000 b/d Sendai refinery and Cosmo Oil Company’s 220,000 b/d Chiba plant will remain closed in the short term.
Closure of nuclear power capacity will also support growth in LNG consumption for the next few years.
The IEEJ expects total LNG consumption for power generation to be about 50.2 to 52.6 million tonnes in FY2011, about 3.6 to 3.7 million tonnes higher than previously forecast.
Four coal power stations in eastern Japan, with a total capacity of six gigawatts, were damaged by the tsunami, three of which are still closed. Joban-Kyodo’s Nakoso thermal power station is the only damaged power station to have partially resumed receiving coal shipments in anticipation of restarting operation in early July.
According to the IEEJ, this is forecast to result in a decline in thermal coal consumption in eastern Japan in 2011. Most of this decline will be offset by an expected increase in consumption in western Japan, resulting in only a marginal decline in thermal coal imports for 2011 as a whole.
Apart from a few temporary shutdowns for safety checks, the Japanese steel industry was largely unaffected by the earthquakes and tsunami. Sumitomo Metal Industries’ Kashima plant in Ibaraki prefecture in north-eastern Japan suffered the most damage. The plant, which produces more than half of Sumitomo Metal Industries’ crude steel, suffered a year-on-year decline in production of 60% in April 2011.
Companies that import Japanese steel, such as shipbuilders in South Korea, have endured some short-term supply disruptions. South Korea is home to the world’s three largest shipbuilders—Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering and Samsung Heavy Industries.