In the day-ahead market on JEPX (Japan Electric Power Exchange), the 24-hour spot power prices on a weekly average basis for May 6-10 delivery rose further from the previous week in East Japan, but lost further ground in West Japan. The contrast in price trends mirrored a fluctuation in solar power supply in East Japan and West Japan. The contrast in price trends mirrored a different status of photovoltaic generation and price decoupling between East Japan and West Japan. In West Japan, the weather was sunny and spot prices hit Yen 0.01 in a series of midday windows even for weekdays. Price decoupling also gave a great impact on the price trends. Especially, price decoupling at the Chubu-Kansai border expanded to a combined 149 windows during May 6-10, compared with 66 windows during Apr 29-May 3. The heavy decoupling led to a contrast in price trends between four areas from Hokkaido to Chubu and five areas from Hokuriku to Kyushu.

In Tokyo and Kansai, the key areas in East Japan and West Japan, the 24-hour average posted a difference in favor of the East by Yen 3.49 for May 6 delivery, Yen 4.02 for May 7 delivery, Yen 2.00 for May 8 delivery, Yen 5.16 for May 9 delivery and Yen 1.98 for May 10 delivery.

In the fuel markets, LNG and crude oil prices inched up from the previous week. Coal prices turned lower.

DES Northeast Asia spot LNG prices hovered in the low $10 level per mmBtu for prompt June 2024 arrival as of May 9, up nearly 20cts from the end of the previous week (May 2). The market was pressured by ample spot availability, combined with slowing demand amid high temperatures.

FOB Newcastle thermal coal prices in Australia stood at slightly below $145 per ton for May 2024 loading as of May 9. The level was down nearly $2 from the end of the previous week.

In the crude oil market, WTI crude for June 2024 stood in the high $79 as of afternoon on May 10 wile Brent crude for July 2024 was trading in the mid $84. Both WTI and Brent were up about 50cts from the end of the previous week. Crude prices were underpinned by a larger-than-expected drawdown in US crude oil inventories from the previous week, on top of the stronger demand projection in US and China.

The actual highest price during the week was at Yen 20.79 in three areas in East Japan for May 6 delivery. Meanwhile, the actual lowest price during the week was at Yen 0.01 in five areas from Hokuriku to Kyushu for May 7 delivery, Kyushu for May 8 delivery, five areas from Hokuriku to Kyushu for May 9 delivery, and all of nine areas as well as the System Price (SP) for May 10 delivery.

By area, the weekly average of the 24-hour spot prices was at Yen 11.31 in Hokkaido, up Yen 2.11 from the previous week, Yen 11.30 in Tohoku, up Yen 1.75, Yen 11.32 in Tokyo, up Yen 1.06, Yen 10.43 in Chubu, up Yen 0.51, Yen 7.99 in Hokuriku, Kansai and Chugoku, down Yen 1.16, Yen 7.88 in Shikoku, down Yen 1.27, and Yen 7.65 in Kyushu, down Yen 1.57.

In the JEPX auction, volumes of offers were 1,003.35 mil kWh on a weekly average basis, down 4.0% from the previous week. Meanwhile, bids on a weekly average basis grew by 5.2% to 795.51 mil kWh. The weekly average of trade volumes expanded by 6.3% to 627.63 mil kWh.

Power demand in nine areas of Japan during May 6-10 was a combined 9,942.27 mil kWh, up 12.1% from 8,871.89 mil kWh during Apr 29-May 3. The figure was down 3.4% from the corresponding period a year earlier. Demand during May 8-12, 2023 after day of week adjustment was 10,290.46 mil kWh.

In the JEPX forward market, no deals were confirmed during May 6-10.

Deals reported on TOCOM (Tokyo Commodity Exchange) during May 3-10 were as below.

Deals reported on EEX (European Energy Exchange) during May 3-10 were as below.

In the third week of May, spot prices are expected to remain vulnerable to weather conditions. The weather is forecast to be partly rainy across Japan on May 13 after the weekend, leaving little scope for photovoltaic generation. But West Japan is expected to have sunshine on May 14, followed by clear weather forecast across Japan on May 15. Thus, ample solar power supply will pressure day time prices, with a chance to hit Yen 0.01 in a series of windows even on weekdays. Meanwhile, the highest temperature is widely forecast to stay around 25 degrees throughout the week. Despite relatively hot climate, air-conditioning demand is unlikely to go into full swing. It will be too early for spot buying to pick up to satisfy real demand.