Ratings Agency Fitch Says Quake to Boost Japanese Demand for Australian Thermal Coal

International ratings agency Fitch Ratings said on Monday that electricity shortfalls in Japan after the accident at the Fukujima nuclear power plant could lead to a boost in Japanese demand for Australian thermal coal.

Fitch also said increased Japanese demand for liquefied natural gas (LNG) could support additional LNG trains at the Browse and Pluto basins, both offshore from northwest Western Australia (WA).

Electricity would be met by coal and fuel oil-fired generation in the short term as Japanese gas-fired plants possessed little spare capacity, Fitch said.

"Japanese gas-fired electricity generators were operating at high capacity prior to the earthquake and have limited ability to further increase production. This will limit the increase in demand for spot LNG cargoes," Fitch director of energy and utilities Arnon Musiker said.

Fitch estimates Japan lost 11 gigawatts of nuclear-fired baseload energy after an earthquake and tsunami that sent Japan's nuclear reactors offline.

Fitch said on Monday that gas-fired power was a "natural substitute" for nuclear power in the medium term due to its relatively low carbon emission intensity and speed of construction.

"Fitch believes that Japanese utilities will seek to maintain a policy of diversifying gas supply, which could result in sufficient support for one to two new LNG trains in Australia," the global ratings agency said.

The replacement of Onagawa, Fukushima, Daichi and Daini nuclear reactors with gas-fired generation could increase LNG demand by nine million tons a year, Fitch said.