Jaslyn Ying of global energy and commodity price reporting agency Argus Media on Tuesday (1 December) published an update regarding demand for LSFO imports in South Korea to fuel its power plants following the government’s directive to shut down some coal-powered plants to monitor air quality over the winter:
South Korean utilities are seeking to import low-sulphur fuel oil (LSFO) as a power generation fuel after the government shut some coal-fired power plants to reduce winter air pollution.
South Korea is idling 9-16 coal-fired units and putting an 80% restriction on output from the remaining capacity as part of its winter fine-dust management policy. This is up from daily suspensions at 8-15 units in the December 2019 to February 2020 winter season.
The shutdowns have prompted utility East-West Power (EWP) to seek 45,000t (290,000 bl) of 0.3% sulphur LSFO for 12-16 December delivery to Ulsan on a cfr basis. Fellow utility Korea District Heating Company (KDHC) last week secured two imported 30,000t cargoes of 0.3% sulphur LSFO through a tender for December-January delivery.
South Korea typically relies on imported LSFO as an emergency fuel to meet base-load power generation demand at times when other fuels are unavailable. EWP sought 155,000t of spot fuel oil for prompt delivery in March 2018, when the government announced plans to idle coal-fired power plants. And the utility returned to the spot market in September this year to buy prompt-loading LSFO after two typhoons forced several domestic nuclear power plants to close.
The latest demand is already almost equal to imports over the whole of last winter. EWP imported 50,000t of 0.3% LSFO through a spot tender for delivery during January 2020, while KDHC imported two 30,000t cargoes of 0.3% LSFO over the winter. The two utilities are the only current buyers of imported LSFO.
But traders said South Korean utilities might limit LSFO imports because of rising nuclear power supply. The country’s nuclear availability is scheduled to average 19.2GW in December-February, up from actual generation of 16.4GW in the same period a year earlier. And the government says it has made advance purchases of around 3.6mn t of LNG for emergency use this winter.
The coal plant shutdowns will include the decommissioning of 2-4 of the country’s oldest units, maintenance at up to 13 units and suspensions of a further nine units, depending on the overall supply-demand balance in the power sector.
Photo credit and source: Argus Media
Published: 2 December, 2020
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