S Korea set for record coal imports on nuclear outages as winter looms

[SEOUL] South Korea's coal imports are set to hit a record in October as nuclear reactor outages bite into energy supply, new coal-fired power stations fire up and the country braces for the imminent start of the peak demand season over the winter.

Shipping data in Thomson Reuters Eikon showed that South Korea's September coal imports marked a record 11.3 million tonnes, with several trading sources saying the October figure would be around 12 million tonnes.

Rodrigo Echeverri, head of bulk commodity analyst at merchant Noble Group, a major trader in physical coal markets, said at an industry event last week that "Korea ... had issues with nuclear generation in 2016 and 2017".

Having to step in to replace nuclear power means South Korean (coal) imports are likely to grow by 9-10 million tonnes in 2017, he said, to almost 110 million tonnes.

The higher demand is being stoked by five new coal-fired power stations that have come online since June, with a combined capacity of 4.6 gigawatt (GW).

An official with South Korea's KOMIPO said the utility was"set to buy 16 to 17 million tonnes of coal this year, 5 to 6 million tonnes more than usual" as it planned to operate two new power plants this year.

That comes as South Korea braces for winter, when demand for power typically jumps as people crank up their heating.

Weather data in Thomson Reuters Eikon shows that average temperatures in Seoul will likely be slightly below the seasonal norm for the next 45 days, implying high heating fuel demand.

The situation is similar in Japan's and China's main cities, the data shows, although the outlook for the rest of winter is not yet clear.

Thermal coal prices are reacting to the tighter demand picture, with benchmark Australian spot cargo prices from its Newcastle port last settling at US$97.10 per tonne, up over a third from its 2017 low in May.

For similar reasons, South Korea's imports of liquefied natural gas (LNG) have also soared since summer. Asian spot LNG prices LNG-AS have jumped by two-thirds since March to US$9 per million British thermal units.

REUTERS