In the day-ahead market on JEPX (Japan Electric Power Exchange), the 24-hour spot power prices on a weekly average basis for Jul 8-12 delivery extended rises steeply from the previous week in both East Japan and West Japan. Severe heat waves gripped the island of Japan throughout the week starting Jul 8, so that a hefty increase in air-conditioning demand pushed up spot prices sharply.

On Jul 8, Tokyo received a delivery of power supply from Chubu amid heightening concerns over a supply crunch. Other measures were also taken including requests for run hikes at thermal units and demand saving on the end-user side. Meanwhile, the imbalance fees in Tokyo tentatively shot up to the Yen 190 level in some windows on Jul 8. The intraday market on the same day witnessed an upsurge to Yen 85 in evening hours. Still, the intraday high in spot prices during the week was capped in the Yen 32 level for Jul 9 delivery. Even the 24-hour average saw the peak at Yen 21.90 in Tokyo for Jul 9 delivery. Several players echoed, "Spot prices had limited upside room despite this severe summer heat and tight supply-demand fundamentals." Some said stable supply put a lid on spot prices. For Jul 10 delivery as well, spot prices marked the intraday high of Yen 30, but the spot market retreated later in the week amid alleviated high temperatures.

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 2.72 for Jul 8 delivery, Yen 4.32 for Jul 9 delivery, Yen 1.60 for Jul 10 delivery, Yen 0.62 for Jul 11 delivery and Yen 1.70 for Jul 12 delivery.

In the fuel markets, LNG, coal and crude oil prices slid from the end of the previous week.

DES Northeast Asia spot LNG prices hovered in the mid $11 level per mmBtu for prompt August 2024 arrival as of Jul 11, down about 60cts from the end of the previous week (Jul 5). LNG prices were weighed by a continued softness in European natural gas from the previous week, together with an unabated supply glut in Northeast Asia. The Ministry of Economy, Trade and Industry (METI) announced on Jul 10 that Japan's LNG inventories for power generation stood at 1.98 mil mt as of Jul 7, down 120,000mt from the previous week. The drawdown came as power producers operated LNG-fired plants at increased rates in a bid to cope with lingering heat waves. The level was up from 1.94 mil mt as of end-July last year but down from the average of past five years at 2.19 mil mt.

FOB Newcastle thermal coal prices in Australia stood in the high $133 level per ton for July 2024 loading as of Jul 11. The level was down about $3.50 from the end of the previous week.

The weakness mirrored a fall in gas prices.

In the crude oil market, WTI crude for August 2024 stood in the low $83 as of afternoon on Jul 12 while Brent crude for September 2024 was trading in the high $85 level. Compared with the end of the previous week, WTI inched down by nearly 10cts while Brent gave up slightly less than $1. Crude oil prices were overshadowed by expectations for alleviated geopolitical risks in the Middle East, on top of a limited impact on oil producing facilities from Hurricane Beryl that landed on Texas in US. But the week-on-week loss in crude futures was limited. Crude oil and gasoline inventories in US showed a sharply larger-than-expected decrease, on top of a growing likelihood that US would step forward to cut key interest rates.

The actual highest price during the week was at Yen 32.18 in seven areas from Tokyo to Kyushu for Jul 9 delivery. Meanwhile, the actual lowest price during the week was at Yen 6.00 in Hokkaido for Jul 6 delivery.

By area, the weekly average of the 24-hour spot prices was at Yen 13.18 in Hokkaido, up Yen 2.26 from the previous week, Yen 13.21 in Tohoku, up Yen 2.63, Yen 18.24 in Tokyo, up Yen 4.14, Yen 16.79 in Chubu, up Yen 3.65, Yen 16.25 in Hokuriku, Kansai and Chugoku, up Yen 4.03, Yen 15.18 in Shikoku, up Yen 3.59, and Yen 15.91, up Yen 3.87.

In the JEPX auction, volumes of offers were 1,091.64 mil kWh on a weekly average basis, down 2.8% from the previous week. Meanwhile, bids on a weekly average basis expanded by 11.5% to 1,028.91 mil kWh. For Jul 9 and Jul 10 delivery, bids outstripped offers after a long interval. The weekly average of trade volumes increased by 3.4% to 754.68 mil kWh.

Power demand in nine areas of Japan during Jul 8-12 was a combined 13,404.96 mil kWh, up 2.8% from 13,045.65 mil kWh during Jul 1-5. The figure was up 0.2% from the corresponding period a year earlier. Demand during Jul 10-14, 2023 after day of week adjustment was 13,382.62 mil kWh.

In the JEPX forward market, no deals were confirmed during Jul 8-12.

Deals reported on TOCOM (Tokyo Commodity Exchange) during Jul 8-12 were as below.

Deals reported on EEX (European Energy Exchange) during Jul 8-12 were as below.

In the third week of July, spot prices are unlikely to show any excessive hikes. The temperatures will not reach the extremely hot day indicator of 35 degrees in any areas throughout the week. Thus, the temperatures will not be high enough to boost demand remarkably, so that spot prices are expected to have limited upside potential. Evening prices tend to mark the intraday high, but market players widely believe "any price hike will be below Yen 25". The price trend after the rainy season is the key to monitor going forward. Even on extremely hot days in the second week, the intraday high was capped in the low Yen 30 level. Thus, only a limited number of players are positive about a possibility of price spikes at this point.