May 7, 2024 - Asian countries including India, Bangladesh, Thailand, Philippines and Vietnam are experiencing record early-summer temperatures that have driven up power demand and consumption of key generation fuels like natural gas, LNG and coal, according to traders and market participants.

"It is often hot during this time of year, but the impact is stronger this time around. For April, India doubled its year-on-year power demand growth from 5% in 2023 to 10% in 2024," Andre Lambine, power analyst at S&P Global Commodity Insights, said.

"Where we have daily data for South and Southeast Asia, we see power demand for April to date growing by 10% or more year on year. Both coal and gas-fired power generation are driven higher, while oil has yet to respond in a significant way," he said.

"Most countries have to look to thermal fuels to meet the extra power demand, because the wet season that typically brings higher hydro power generation is still a few weeks away," Lambine added.

Several countries saw the heat wave coming and had made early preparations to shore up fuel inventories, boost power dispatch in the dry season and anticipate shortages of hydropower, and this procurement activity picked up through April helped by low prices.

Platts assessed the June JKM, the benchmark price for LNG cargoes delivered to Northeast Asia, at $9.971/MMBtu April 29, down 18.2 cents/MMBtu or 1.82% on the day.

For instance in Southeast Asia, Thai buyers had issued as many as 14 tenders up to the end of March, double the number of buy tenders issued over the same period in 2023, mostly by national oil and gas company PTT. By end-April, Thailand had issued a total of 19 tenders in 2024, out of which at least 27 cargoes were awarded (five tenders and five cargoes for April alone).

New LNG Importers

Two new LNG importers also took the opportunity to tap the spot market at low prices.

The Philippines' power utility First Gen issued two LNG tenders in 2024, of which the first one for March delivery was not awarded, but the second for end-May delivery was awarded to CNOOC Gas and Power Trading & Marketing.

"The hot weather has led to an increase in power demand, we're getting yellow alerts. Domestic gas is still our primary source for gas-fired power plants for now although reserves are thin," a Philippines-based market source said.

Vietnam's PV Gas issued four LNG tenders in 2024, of which two tenders for two cargoes were awarded, one was unawarded due to high prices, and one for an end-May cargo is yet to be awarded.

Regulators in Vietnam have said they plan to supply the LNG to an existing gas-fired power plant due to the dry season and domestic gas shortages, while its initial LNG imports are being partially supplied to industrial customers via trucks.

Vietnam's Ministry of Industry and Trade has adjusted its power supply plan for 2024 on the back of higher projections for power demand in the first quarter, but analysts said price is a major consideration despite existing demand.

"We are not in a rush to buy cargoes. We expect less consumption in June as Vietnam moves into rainy season," one market participant said.

In Bangladesh, the current heat wave is the longest in a single year and the country has been generating record-high electricity and regasifying maximum LNG to meet demand.

The country's peak electricity generation reached 16,233 MW in the evening on April 12, 585 MW above the previous all-time high of 15,648 MW recorded on April 19, 2023, according to the national load dispatch center, or NLDC, of state-owned Power Grid Company of Bangladesh.

Overall peak electricity generation is expected to reach around 17,500 MW this summer, deputy chief information officer of the Ministry of Power, Energy and Mineral Resources, Mir Mohammad Aslam Uddin, said previously.

On April 25, state oil and gas company Petrobangla regasified around 1.085 Bcf/d of LNG, the highest since LNG imports began on April 24, 2018, according to official data.

Despite this Bangladesh is facing power outages and NLDC data showed a shortfall of 3,196 MW at midday April 29 amid record-high temperatures.

Scorching Summer

Thailand's electricity usage hit a new daily high of 36,700 MW on April 29, with temperatures averaging 35-38 degrees C and peaking at 42 degrees, state media Bangkok Post reported citing energy authorities.

The National Grid Corporation of the Philippines (NGCP) has issued both red alerts and yellow alerts on the island of Luzon and yellow alerts in Mindanao, and grid operators have warned of blackouts as temperatures over 40 C force schools to shut.

Myanmar recorded its highest-ever April temperature of 48.2 C, Singapore's Straits Times reported April 29 citing authorities, and Vietnam experienced temperatures around 40 Celsius is several parts of the country.

India has faced heat waves over the past 10 days with maximum temperatures ranging from 40 C to 46 C in many regions, according to Press Trust of India.

Bangladesh's capital Dhaka recorded temperatures of 40.5 C on April 29, just short of its high of 40.6 C last year, and as high as 43 C in some parts.