KEEI Monthly Korea Energy Trends No.90

(1)

KEEI

MONTHLY

KOREA ENERGY TRENDS

Series No.90

2019.09

2019 / 09

PETROLEUM -4.9%

COAL -1.9%

LNG -13.3%

NUCLEAR 20.2%

NEW & RENEWABLE 10.5%

Jun.2019

KOREA ENERGY ECONOMICS INSTITUTE

(2)

(3)

1. The Economy and the Industry

□ Gross Domestic Product (“GDP”) increased by 2.0% year-on-year in 2Q backed by the increased private and government spending, although the investment declined.

o Construction investment fell by 3.5% despite increased investment in the civil engineering sector (2.9%), as it declined (-5.9%) in the construction of buildings amid sluggish real estate business.

Facility investment dropped by 7.0%, mainly in machinery (-13.3%), although the investment in transport equipment increased (12.2%).

o The private spending was up 2.0% led by semi-durable goods, and the government spending rose by 7.0% due to increased spending on goods and health insurance.

□ The production index of mining & manufacturing industries declined by 2.6% year-on-year in June, as the output of all major products declined except semiconductors.

o The production index of basic chemical materials dropped by 10.0% year-on-year owing to the routine maintenance and decreased export volume(-8.2%).

o The production index of iron & steel products fell by 2.5% year-on-year due to the output reduction of steel bars (-2.6%) and sheets (-5.4%).

o The production index of automobiles was down 1.5% despite increased export value, as the number of automobiles produced declined (-1.0%) as a result of falling domestic demand.

□ The service production index grew by 0.1 which was due to the sluggish business in the wholesale

& retail and restaurant & accommodation sectors.

► Trend in major economic and industrial indicators

2017 2018p 2019p

M1~6 M6 M1~6 M5 M6

GDP (trillion won) 1 760.8 1 807.7 879.5 450.8 895.9 - 460.1

(3.2) (2.7) (2.8) (2.9) (1.9) - (2.0)

Total export ($billion, customs

clearance basis) 573.7 604.9 296.7 51.1 271.2 45.7 44.0

(15.8) (5.4) (6.3) (-0.4) (-8.6) (-9.8) (-13.8)

Industrial production index

(2015=100) 104.7 106.1 104.6 107.5 103.2 107.6 104.7

(2.5) (1.3) (0.5) (1.9) (-1.3) (0.5) (-2.6)

Semiconductors 138.9 167.0 154.8 180.6 165.5 177.4 193.9

(10.8) (20.3) (17.4) (37.7) (6.9) (12.9) (7.4)

Basic compound 110.4 110.4 111.3 110.1 104.2 102.6 99.1

(5.5) - (2.7) (5.3) (-6.4) (-10.5) (-10.0)

Steel 102.9 99.8 100.6 100.6 98.4 101.4 98.1

(1.7) (-3.1) (-2.2) (-2.9) (-2.2) (-2.5) (-2.5)

Cars 95.0 93.7 92.3 94.4 94.2 100.5 93.0

(-2.7) (-1.4) (-7.1) (-7.8) (2.1) (2.9) (-1.5)

Service production index

(2015=100) 104.5 106.7 105.2 108.0 106.4 109.4 108.1

(1.8) (2.1) (2.4) (1.9) (1.2) (2.3) (0.1)

Note: Figures are based on the real price of 2010, P means provisional, ( ) is year-on-year growth rates (%) Source: Korea International Trade Association, Korea Statistical Information Service

(5)

2. Energy Prices

Global energy prices

□ Global oil price fell by 6.3% in August from the previous month amid the ongoing US-China trade dispute and worries over a resultant global economic downturn.

o Global oil price declined due to the prolonged trade war between the US and China and concerns of decreased petroleum demand triggered by a global economic slowdown, even though there were some factors which could increase oil price, such as worsening US-Iran tensions and decreased US crude inventory.

□ Global coal price went down by 9.1% (in August) from the previous month, while natural gas price has been flat for four consecutive months.

o The price of Australian coal declined, as coal demand decreased from the power sector in China, and as coking coal demand also decreased amid the sluggish iron & steel business as a result of the US-China trade dispute.

► Trend in global energy prices

2017 2018 2019

M6 M7 M8 M6 M7 M8

Crude oil (US$/bbl) 53.0 68.6 72.3 72.9 71.4 59.8 61.7 57.8

(22.4) (29.5) (55.8) (52.5) (42.6) (-17.2) (-15.4) (-19.0)

Natural gas (US$/MMBTU) 8.6 10.7 10.4 10.4 10.9 10.0 10.1 10.1

(16.8) (24.0) (17.6) (17.9) (22.0) (-3.8) (-3.0) (-6.9)

Coal (US$/ton) 88.6 107.0 114.3 119.6 117.3 72.5 72.1 65.6

(33.8) (20.9) (41.0) (36.7) (19.0) (-36.6) (-39.7) (-44.1)

Note: Global oil price is the average of the three benchmarks; Brent, Dubai, WTI, Natural gas and coal prices are based on Japan’s LNG importing price from Indonesia (CIF) and the price of Australian coal. ( ) is year-on-year growth rates (%)

Source: www.petronet.co.kr, World Bank(Commodity Markets)

► Trend in global energy price by major sources

- 3.0 6.0 9.0 12.0 15.0

- 30 60 90 120 150

2016.08 2017.02 2017.08 2018.02 2018.08 2019.02 2019.08

Natural Gas(US$/MMBTU)

Coal Oil Natural Gas Coal (US$/ton), Oil (US$/bbl)

(6)

Domestic energy prices

□ Gasoline and diesel prices were almost the same as the previous month in August despite the global oil price decline.

o Gasoline price started an upward move from the fourth week of July and then continued to grow moderately with the 0.1% growth (in August) from the previous month. Diesel price continued to fluctuate and was down 0.1% in August than the previous month.

□ Propane and butane prices dropped by around 1% in August from the previous month, as several domestic LPG importers lowered the supply price.

o Domestic LPG importers except E1 cut the supply price (20 won per liter) in the wake of the two consecutive months of decline in Saudi Aramco’s propane and butane prices (-12.8%, -14.5% in July), and as a result, domestic prices of propane and butane fell by 0.6% and 1.4% respectively from the previous month.

► Trend in domestic energy prices

2017 2018 2019

M6 M7 M8 M6 M7 M8

Gasoline (won/liter) 1 491.3 1 581.3 1 609.1 1 610.9 1 618.3 1 517.5 1 491.5 1 493.7

(6.3) (6.0) (10.1) (12.0) (11.5) (-5.7) (-7.4) (-7.7)

Diesel for transport (won/liter) 1 282.5 1 391.9 1 410.0 1 411.9 1 419.1 1 379.8 1 352.8 1 351.9

(8.4) (8.5) (12.7) (14.8) (14.0) (-2.1) (-4.2) (-4.7)

Bunker-C (won/liter) 619.3 735.0 759.5 771.5 788.6 799.2 776.5 -

(18.9) (18.7) (24.4) (32.0) (32.7) (5.2) (0.6) -

Propane (won/kg) 1 833.8 1 920.5 1 860.0 1 902.9 1 942.9 1 929.0 1 851.4 1 841.1

(8.5) (4.7) (3.0) (6.9) (9.2) (3.7) (-2.7) (-5.2)

Butane for transport (won/liter) 826.5 874.6 843.7 869.1 894.8 851.6 796.8 785.4

(12.6) (5.8) (4.8) (10.5) (13.9) (0.9) (-8.3) (-12.2)

Note: Gasoline, diesel and butane prices are based on charging station prices, Bunker-C price is based on dealership price, propane price is based on sales shop price. ( ) is year-on-year growth rates (%)

Source: www.opinet.co.kr

► Trend in domestic petroleum product prices

- 500 1 000 1 500 2 000 2 500

2016.08 2017.02 2017.08 2018.02 2018.08 2019.02 2019.08

won/liter, won/kg

Gasoline Diesel for transport Bunker-C Propane

Butane for transport

(7)

□ After the city gas price was raised in July, the price remained flat in August.

o City gas price had not been raised since July 2018 despite the growth in global LNG price in order to alleviate the economic burden of people, but it was raised in July 2019 for the first time in a year to collect accounts receivable that were accumulated during the price-fixing period.

o According to the raw material cost pass-through scheme, city gas price is adjusted bimonthly in every odd month in order to reflect over 3% changes in natural gas importing price, which is affected by changes in global oil price and exchange rates.

□ Heat energy price rose by 3.8% from the previous month reflecting the increased city gas price (July).

o Heat energy price increased for the first time in 13 months (since July 2018), which was affected by increased city gas price in July and decreased fuel cost as a result of the energy tax reform.

o Korea District Heating Corporation’s heat energy price is linked to city gas price according to the fuel cost pass-through scheme, and the actual fuel cost is reflected in heat energy prices once a year (LNG for over 100MW, city gas for under 100MW).

► Trend in city gas prices by end-use sectors

Note: Instead of volume(M³), calorie (MJ) has been used as the unit of measurement in the city gas pricing system since July 2012. Figures before that are converted based on standard calorie (additional tax, base charge excluded)

► Trend in heat energy prices by end-use sectors

Note: The prices are based on flat price for heating (additional tax, base charge excluded) Source: Korea District Heating Corporation.

10 15 20 25

2016.08 2017.02 2017.08 2018.02 2018.08 2019.02 2019.08

won/MJ

Commercial Residential industrial

60 65 70 75 80 85 90 95

2016.08 2017.02 2017.08 2018.02 2018.08 2019.02 2019.08

won/Mcal

Business Residential Public

(8)

□ Electricity prices¹ have been flat since the prices for general and industrial use were adjusted in June for the summer season.

o Electricity prices for general and industrial use that are subject to the seasonal adjustment, remained flat in July after the price change from spring/autumn (Mar-May, Sept-Oct) to summer (June-Aug) in June.

□ The unit sales price of electricity for industrial and general use increased according to the seasonal price adjustment (summer), while that for residential use declined.

o The unit sales price of electricity for residential use that is subject to progressive pricing scheme fell by 4.2% due to a temporary relief in the scheme during summer, while the unit sales prices for general and industrial use were up 10.0% and 4.9% respectively following the price adjustment for the summer season.

► Trend in electricity prices by end-use sectors

► Trend in unit sales price of electricity

1The electricity prices by end-use sectors refer to the prices for residential use ([high voltage], the 2^nd stage electricity rates), general use ([A], low voltage) and Industrial use ([B], high voltage B middle load).

- 50 100 150 200 250

2016.08 2017.02 2017.08 2018.02 2018.08 2019.02 2019.08

won/kWh

General Industrial Residential

- 30 60 90 120 150 180

2016.07 2017.01 2017.07 2018.01 2018.07 2019.01 2019.07

won/kWh

General Industrial Residential Night time

(9)

3. Energy Supply

□ The total energy import volume declined by 3.1% year-on-year in June, as crude oil import decreased due to the maintenance at some refineries and falling petroleum demand.

o The crude oil import decreased by 12.5% year-on-year, because planned maintenance continued at some refineries and petroleum demand decreased.

o The import volume of petroleum products dropped by 1.0% year-on-year despite increased naphtha import, as LPG and bunker-C imports declined.

o The foreign energy dependence including nuclear energy stood at 92.0%, and the energy’s share of the total import value fell by 2.6%p year-on-year to 25.7%.

► Trend in energy trade and domestic production

2017 2018p 2019p

M1~6 M6 M1~6 M5 M6

Import volume

Crude oil (Mbbl) 1 118.2 1 116.3 557.4 98.0 544.3 84.1 85.7

(3.7) (-0.2) (2.7) (12.2) (-2.4) (-11.6) (-12.5)

Petroleum product (Mbbl) 314.5 341.6 168.6 28.6 159.7 28.5 28.3

(-6.0) (8.6) (5.7) (2.1) (-5.3) (1.7) (-1.0)

Bituminous coal (Mton) 131.5 131.5 65.9 10.2 61.9 10.6 9.4

(11.0) (0.0) (0.9) (-8.6) (-6.1) (6.4) (-7.4)

Anthracite (Mton) 7.0 8.1 4.1 0.8 3.7 0.6 0.6

(-25.7) (16.0) (7.3) (54.3) (-8.8) (-22.3) (-19.0)

LNG (Mton) 37.5 44.0 22.7 3.7 19.9 3.0 3.2

(12.2) (17.3) (15.4) (8.3) (-12.2) (6.8) (-13.8)

Import volume (Mtoe) 339.7 354.5 176.3 28.9 171.4 28.1 28.0

(5.5) (4.4) (4.5) (4.1) (-2.8) (-1.2) (-3.1)

Import value (billion US$, CIF) 109.5 146.0 69.6 12.7 64.2 10.7 10.3

(35.2) (33.3) (28.3) (47.1) (-7.8) (-6.9) (-19.1)

Energy share of total import

value (%) 22.9 27.3 26.2 28.3 25.6 24.6 25.7

Foreign energy dependence (%)* 93.9 93.5 93.6 93.1 92.9 92.2 92.3

Domestic production

Hydropower (TWh) 7.0 7.3 3.4 0.7 3.0 0.5 0.5

(5.5) (3.9) (5.6) (29.8) (-11.8) (-32.1) (-34.8)

Anthracite (Mton) 1.5 1.2 0.7 0.1 0.6 0.1 0.1

(-14.0) (-19.2) (-14.2) (-20.8) (-19.4) (-17.9) (-25.4)

Natural gas (Mton) 0.3 0.2 0.1 0.0 0.1 0.0 0.0

(120.5) (-10.4) (-7.0) (-6.4) (-22.7) (-11.4) (-9.2)

Renewable energy (Mtoe) 15.8 17.5 8.7 1.4 9.7 1.7 1.6

(16.7) (10.5) (10.7) (10.5) (12.3) (17.4) (15.5)

Note: p means provisional, ( ) is year-on-year growth rates (%), 'Foreign energy dependence (%) including nuclear energy Source: Monthly Energy Statistics

(10)

4. Energy Consumption

□ Total Primary Energy Supply (“TPES”) was down 1.7% year-on-year in June despite increased use of nuclear and renewable energy, as coal, petroleum and gas use all decreased.

o Transport petroleum use declined a bit, mainly in the road transport and domestic navigation sectors due to decreased traffic and trade volumes, and the industrial petroleum use also decreased, especially naphtha, due to the scheduled maintenance at petrochemical facilities, which led to a 4.9%

year-on-year drop in the total consumption.

o Coal consumption fell by 1.9% year-on-year, as bituminous coal use declined in the steelmaking sector amid the sluggish iron & steel business, and as the consumption also decreased in the power generation sector following the government’s limit on maximum output at power plants as a means of fine dust mitigation.

o Gas consumption plunged by 13.3% on a year-on-year basis, as city gas use declined due to higher prices and decreased number of cooling degree days (-3.5 degree days), and as the consumption fell sharply in the power generation sector amid falling power demand and growing nuclear generation.

□ Total Final Consumption (“TFC”) dropped by 2.6% year-on-year, and the consumption declined in all end-use sectors.

o Industrial energy use fell by 3.6% compared to the same period last year, as the production slowed down in large energy consuming industries due to the economic downturn and the maintenance at some petrochemical facilities.

o Transport energy consumption went down by 1.2%, as the consumption declined in all transport sectors except the aviation sector partly due to decreased traffic and trade volumes.

o Energy consumption in buildings decreased by 0.2% year-on-year, as the use of all energy sources declined except renewable energy amid decreased number of cooling degree days and increased energy prices.

► Energy consumption trend

2017 2018p 2019p

M1~6 M6 M1~6 M5 M6

Total energy (Mtoe) 302.1 306.1 152.7 23.6 150.5 23.3 23.2

(2.9) (1.3) (2.7) (2.7) (-1.5) (-3.7) (-1.7)

- Non-energy oil & coal excluded 215.4 221.6 110.8 16.7 109.5 16.3 16.6

(1.6) (2.9) (3.9) (4.0) (-1.1) (-3.6) (-0.2)

Final energy (Mtoe) 233.9 236.7 120.1 18.4 118.9 18.3 17.9

(3.9) (1.2) (3.0) (2.8) (-1.0) (-3.6) (-2.6)

Note: p means provisional, ( ) is year-on-year growth rates Source: Monthly Energy Statistics (KEEI)

(11)

► The growth rates of total and final energy consumption & energy consumption trend by energy source and end-use sectors

- 6.0 - 3.0 0.0 3.0 6.0

2019.04 2019.05 2019.06

Coal Oil Gas Hydro power

Nuclear Renewables TPES

yoy (%, %p)

- 6.0 - 3.0 0.0 3.0 6.0

2019.04 2019.05 2019.06

Industry Transport Buildings TFC yoy (%, %p)

(12)

5. Coal

□ Coal consumption fell by 1.9% year-on-year in June, led by the industrial and power generation sectors.

o Coal consumption in the power generation sector was flat compared to the same month last year despite decreased average preventive maintenance per day, owing to the shutdown of Youngdong unit2 (2019.1) and the fine dust reduction measures.

o Industrial coal use was down 4.3% on a year-on-year basis, taking the lead in the downward trend of the total coal use, which was attributed to decreased bituminous coal use in the steelmaking sector and plunged anthracite coal use in the industrial sector.

► Coal consumption trend

2017 2018p 2019p

M1~6 M6 M1~6 M5 M6

Coal (Mton) 139.8 141.0 68.9 10.7 63.0 9.5 10.5

(8.1) (0.9) (3.7) (3.7) (-8.5) (-11.9) (-1.9)

Industry 49.3 48.3 24.0 4.2 23.9 4.0 4.0

(3.2) (-2.0) (-1.9) (2.9) (-0.3) (-3.6) (-4.3)

-Coking-coal 36.3 34.6 16.9 2.9 17.3 2.9 2.9

(8.5) (-4.6) (-4.5) (-4.4) (2.1) (0.6) (-1.2)

Buildings 1.1 0.9 0.3 0.0 0.2 0.0 0.0

(-14.0) (-15.7) (-10.9) - (-30.8) (-35.0) (-42.9)

Power generation 89.4 91.8 44.6 6.5 38.9 5.4 6.5

(11.3) (2.6) (7.1) (4.2) (-12.8) (-17.1) (-0.3)

Note: p means provisional, ( ) Is year-on-year growth rates (%) Source: Monthly Energy Statistics

► The growth rate of coal consumption by use

- 40.0 - 20.0 0.0 20.0 40.0

2016.06 2016.12 2017.06 2017.12 2018.06 2018.12 2019.06

yoy (%)

Total Iron & steel Cement Power generation

(13)

6. Petroleum

□ Petroleum consumption fell by 4.9% year-on-year in June, as it plunged in the industrial sector, although the rate of decline eased in the transport sector.

o Industrial petroleum use dropped by 6.6% year-on-year; the use of non-energy oil fell by 7.1%, especially naphtha, and the use of energy oil (including LPG) decreased by 4.0%.

o Petroleum use declined in the transport sector, led by the road transport and domestic navigation sectors. The rate of decline, however, was much lower than the previous month.

► Trend in petroleum product consumption by end-use sectors

2017 2018p 2019p

M1~6 M6 M1~6 M5 M6

Petroleum (Mbbl) 937.1 931.8 466.6 75.5 454.6 72.6 71.8

(1.7) (-0.6) (1.9) (1.5) (-2.6) (-7.1) (-4.9)

Industry 567.0 564.1 282.2 46.1 272.3 46.2 43.0

(4.5) (-0.5) (2.5) (2.7) (-3.5) (-5.9) (-6.6)

-Naphtha 458.4 451.2 226.5 36.2 215.3 36.4 33.5

(6.6) (-1.6) (1.6) (2.4) (-4.9) (-6.3) (-7.5)

Transport 303.2 302.3 148.4 25.7 150.1 22.9 25.4

(0.9) (-0.3) (0.4) (0.7) (1.1) (-8.7) (-1.2)

Buildings 56.4 53.7 28.8 3.1 27.5 3.0 2.9

(0.3) (-4.9) (0.4) (-11.7) (-4.4) (-13.5) (-8.1)

(-51.9) (12.1) (21.1) (27.4) (-36.2) (3.1) (-21.4)

Note: p means provisional, ( ) is year-on-year growth rates (%) Source: Monthly Energy Statistics

► The growth rates of petroleum product consumption & the consumption by end-use sectors

- 9.0 - 6.0 - 3.0 0.0 3.0 6.0

2019.04 2019.05 2019.06

yoy (%)

Transformation Building Transport Industry

Petroleum products

(14)

7. Gas

□ Natural gas consumption dropped by 13.3% year-on-year in June, as it fell sharply in the power generation sector partly due to surging nuclear generation.

o Gas use for power generation has plunged for eight consecutive months amid decreased electricity consumption (-1.0%) and a sudden growth in nuclear generation (20.2%).

□ City gas consumption fell by 1.5% year-on-year (in June), especially in the industrial and buildings sectors.

o Industrial city gas consumption declined, as the consumption decreased in the petrochemical (- 9.7%) and fabricated metals (-2.4%) sectors, although it increased by 2.3% in the primary metals sector.

o City gas use in buildings declined on a year-on-year basis, as the consumption fell by 1.3% and 0.3%

respectively in residential and commercial buildings due to falling demand for hot water and air conditioning in large buildings amid decreased average temperature (nationwide, -0.9°C) in June.

► Trend in natural gas and city gas consumption

2017 2018p 2019p

M1~6 M6 M1~6 M5 M6

LNG (Mton) 36.4 40.9 22.2 2.6 20.3 2.5 2.3

(4.3) (12.5) (19.2) (14.0) (-8.5) (-9.4) (-13.3)

(0.6) (15.6) (26.9) (14.3) (-13.3) (-14.4) (-23.1)

city gas production 18.4 19.8 11.0 1.0 10.7 1.1 1.0

(5.8) (7.7) (10.4) (12.1) (-3.2) (-1.0) (-0.8)

City gas (bm³) 22.6 24.3 14.0 1.3 13.6 1.5 1.3

(6.3) (7.3) (9.4) (11.6) (-2.8) (1.5) (-1.5)

Industry 7.8 8.7 4.5 0.7 4.4 0.7 0.6

(7.7) (12.4) (11.6) (20.4) (-1.3) (1.4) (-2.0)

Buildings 13.6 14.3 9.0 0.5 8.6 0.7 0.5

(6.0) (5.2) (9.1) (4.9) (-3.5) (1.8) (-0.8)

► The growth rate of city gas consumption by major industries

- 100.0 0.0 100.0 200.0 300.0

2016.06 2016.12 2017.06 2017.12 2018.06 2018.12 2019.06

yoy (%)

Industrial use Iron & steel Petrochemical Fabricated metals

(15)

8. Electricity

□ Electricity consumption dropped by 1.0% year-on-year in June, as it declined in both of the industrial and buildings sectors due to a slowdown in production and temperature effect.

o Industrial electricity use decreased due to the sluggish production in large power consuming businesses; electricity use in the primary metals, petrochemical and fabricated metals sectors fell by 4.2%, 2.4% and 0.2% respectively.

o Electricity consumption in commercial buildings declined due to temperature effect and output reduction in the restaurant & accommodation sector, while it grew slightly in residential buildings despite decreased cooling degree days partly because of the increased supply of home appliances, and accordingly, the total consumption in buildings declined.

► Trend in electricity consumption by end-use sectors

2017 2018p 2019p

M1~6 M6 M1~6 M5 M6

Electricity (TWh) 507.7 526.1 261.7 41.0 259.9 40.7 40.6

(2.2) (3.6) (4.1) (3.5) (-0.7) (0.4) (-1.0)

Industry 276.7 283.7 140.8 23.0 140.2 23.2 22.7

(2.5) (2.5) (2.8) (2.1) (-0.4) (-0.5) (-1.6)

Transport 2.9 3.0 1.4 0.2 1.4 0.2 0.2

(6.5) (3.6) (6.6) (1.1) (-0.2) (2.1) (0.8)

Buildings 228.2 239.5 119.4 17.8 118.2 17.3 17.7

(1.7) (4.9) (5.6) (5.3) (-1.0) (1.7) (-0.3)

Residential 66.5 70.7 33.5 5.3 33.8 5.2 5.3

(0.5) (6.3) (4.2) (4.7) (1.0) (2.1) (0.6)

Commercial 130.4 136.4 69.5 10.1 68.3 9.7 10.0

(2.3) (4.6) (6.2) (6.2) (-1.8) (2.4) (-0.5)

Notes: p means provisional, ( ) is year-on-year growth rates (%) Source: Monthly Energy Statistics

► The growth rate of electricity consumption in manufacturing industry

- 20.0 - 10.0 0.0 10.0 20.0

2016.06 2016.12 2017.06 2017.12 2018.06 2018.12 2019.06

yoy (%)

Iron & steel Petrochemical Fabricated metal Manufacturing industry

(16)

9. Nuclear

□ The total nuclear generation posted a year-on-year growth of 20.2% in June amid decreased preventive maintenance and accordingly increased capacity factors.

o The average capacity factor at nuclear power plants grew by 14.3%p year-on-year to 86.1%

following the shutdown of Wolsong unit1 and decreased average preventive maintenance per day.

o Nuclear energy’s share of the total generation went up by 5.6%p to 31.0% on a year-on-year basis

► Nuclear power plants operation status

2018 2019 2018 2019

6 7 8 9 10 11 12 1 2 3 4 5 6 6 7 8 9 10 11 12 1 2 3 4 5 6 Kori2 ################ ################ ################ ################ ################ Hanul1 ################ ################ ################ ################ ################ ################ ################ ################

Kori3 Hanul2 ################

Kori4 Hanul3 Shinkori1 Hanul4 ################ ################ ################ ################

Shinkori2 Hanul5 Shinkori3 ################ ################ ################ Hanul6 ################ ################ ################ ################ ################

Hanbit1 ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ Wolsong1 ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ ################

Hanbit2 ################ ################ ################ ################ ################ ################ ################ ################ Wolsong2 ################

Hanbit3 ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ Wolsong3 ################ ################ ################ ################ ################ ################

Hanbit4 ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ ################ Wolsong4 ################ ################ ################

Hanbit5 ################ ################ ################ ################ Shinwolsong1 ################

Hanbit6 ################ ################ Shinwolsong2 Notes: ■ normal operation, ■ prevented maintenance, ■ unscheduled shutdown

► The growth rate of nuclear generation & daily average of preventive maintenance

-60.0 -30.0 0.0 30.0 60.0

- 3 6 9 12

2016.06 2016.12 2017.06 2017.12 2018.06 2018.12 2019.06

yoy (%, %p) GW/day

Preventive maintenance Power generation (%)

Change in capacity factor (%p)

(17)

10. Heat and Renewable energy

□ Heat energy consumption fell by 0.1% year-on-year in June, led by the residential sector.

o Heat energy consumption slightly declined on a year-on-year basis, as the consumption fell by 0.6%

in the residential sector that takes up a large share of the total consumption, although it rose by 1.0% and 1.7% respectively in the commercial and public sectors.

□ Renewable & other energy consumption recorded a year-on-year growth of 10.5% (in June) despite decreased hydropower generation, as the use of other renewable sources increased.

o Renewable generation (except hydropower) was up over 30% on a year-on-year basis, led by the solar PV, fuel cells and bioenergy, although the electricity generation from waste, wind and marine energy decreased.

o Hydropower generation (including pumping-up & small hydro) dropped by over 30% for two months in a row, even though the amount of rainfall increased (6.7%).

► Heat energy consumption & heating/cooling degree days

Note: The total heat energy consumption is estimated based on the total supply from district heating & cooling companies (KEA’s collective energy business).

Previously, the figure reflected the monthly supply data of only three energy companies (KDHC, GS Power, SH Corp.).

► Trend in renewable and other energy consumption

- 30.0 0.0 30.0 60.0

0 200 400 600

2016.06 2016.12 2017.06 2017.12 2018.06 2018.12 2019.06

1 000 toe

Public services Commercial Residential

Heat energy consumption yoy (%)

-15.0 0.0 15.0 30.0 45.0

- 5 000 10 000 15 000 20 000

2017.06 2017.12 2018.06 2018.12 2019.06

yoy (%) Other PPA Fuel Cells IGCC Waste Biofuels Ocean

Hydro (Include Small Hydro) Wind

Solar PV (Include PPA) New & Renewables MW

(18)

11. Industry

□ Industrial energy consumption went down by 3.6% year-on-year in June partly due to the sluggish production in large energy consuming businesses.

o Energy use declined in the three largest energy consuming industries, which was due to the maintenance work at some petrochemical plants, sluggish production in the industries that are main sources of demand for steel products and a slowdown in the semiconductor business.

o Energy consumption in the petrochemical sector declined despite the construction of new plants in H2 2018 and H1 2019, because naphtha consumption decreased due to the scheduled maintenance and unscheduled shutdown of some naphtha cracking centers.

o Energy consumption in the primary metals sector continued its downward trend, as the production index of the iron & steel sector declined (-2.5%) driven by lower domestic demand amid decreased auto production and slow construction business.

o Energy consumption in the fabricated metals sector decreased compared to the same period last year due to decreased auto production and slow semiconductor business.

► Trend in the industrial energy consumption

2017 2018p 2019p

M1~6 M6 M1~6 M5 M6

Industry (Mtoe) 144.3 145.0 72.3 11.9 71.4 11.9 11.5

(4.7) (0.5) (2.2) (3.1) (-1.3) (-3.1) (-3.6)

Petrochemical 70.4 71.5 35.8 5.8 34.4 5.8 5.5

(6.7) (1.6) (4.3) (5.6) (-3.9) (-6.2) (-6.3)

- Naphtha 56.2 55.3 27.8 4.4 26.4 4.5 4.1

(6.6) (-1.6) (1.6) (2.4) (-4.9) (-6.3) (-7.5)

Iron & Steel 35.0 28.9 14.2 2.4 14.4 2.4 2.4

(24.4) (-17.6) (-17.3) (-17.8) (1.2) (0.1) (-1.3)

-Coking coal 25.3 24.1 11.8 2.0 12.1 2.0 2.0

(8.0) (-4.6) (-4.5) (-4.4) (2.1) (0.6) (-1.2)

Fabricated metal 10.8 11.4 5.7 0.9 5.8 0.9 0.9

(1.9) (5.9) (6.0) (6.8) (0.9) (1.4) (-0.5)

Share of feedstock (%) 59.9 58.2 57.9 58.0 57.2 58.0 56.9

► Industrial energy consumption & production index

- 20.0 - 10.0 0.0 10.0 20.0 30.0

2016.06 2016.12 2017.06 2017.12 2018.06 2018.12 2019.06

yoy (%)

Energy consumption

Iron & steel Production index Basic compounds Production index ICT Production index

(19)

12. Transport

□ Transport energy use dropped by 1.2% year-on-year in June despite increased energy use in the aviation sector, as it decreased in the road transport and domestic navigation sectors

o Energy consumption in the road transport sector declined for two months in a row (until June), though the rate of decline was much lower than the previous month.

o Energy consumption in the domestic navigation sector dropped by over 10% year-on-year as a result of decreased import and coastal transport volumes (-12.0%, -10.0%), although the export volume increased (3.1%, national flag vessels).

o Energy consumption in the aviation sector increased despite decreased number of domestic flights, because that of international flights surged.

► The growth rate of petroleum consumption in the transport sector

2017 2018p 2019p

M1~6 M6 M1~6 M5 M6

Transport (Mtoe) 42.8 43.0 21.1 3.7 21.3 3.3 3.6

(1.2) (0.4) (1.0) (1.6) (1.0) (-8.3) (-1.2)

Road 34.1 34.4 16.8 3.0 17.2 2.6 2.9

(0.5) (0.9) (1.2) (2.7) (2.5) (-9.7) (-1.4)

Navigation 3.5 3.2 1.6 0.2 1.4 0.2 0.2

(5.8) (-9.9) (-10.3) (-10.4) (-13.2) (-7.8) (-10.5)

Aviation 4.8 5.0 2.5 0.4 2.5 0.4 0.4

(3.2) (4.4) (7.9) (2.1) (0.5) (0.0) (5.4)

Rail 0.3 0.4 0.2 0.0 0.2 0.0 0.0

(2.5) (3.6) (5.6) (-1.5) (-1.2) (0.5) (-0.5)

► The growth rate of energy consumption in the transport sector & major petroleum products

- 20.0 - 10.0 0.0 10.0 20.0

2019.04 2019.05 2019.06

yoy (%)

Gasoline Diesel LPG Bunker-c Fuel oil Transport

(20)

13. Buildings

□ Energy use in buildings dropped by 0.2% year-on-year in June despite increased use of renewable energy, as the use of other energy sources declined including petroleum and electricity.

o Energy use in buildings slightly decreased despite growing use of renewable energy, because electricity, coal and petroleum use all declined due to higher prices and decreased number of cooling degree days amid cooler weather than normal for mid-June.

o Energy use in residential buildings declined by 1.8% year-on-year, as briquette and petroleum use continued to decline along with decreased use of other energy sources (city gas -1.3%, heat energy -0.6%) except electricity (0.6%).

o Energy use in commercial buildings started a downward move despite the 22.4% growth in diesel use, because LPG, city gas and electricity consumption all declined (-13.5%, -0.3%, -0.5%) amid the sluggish production in the wholesale & retail and restaurant & accommodation sectors.

o Energy use in public buildings increased, driven by growing use of renewable energy (12.3%), although petroleum and electricity use declined.

► Energy consumption trend in the buildings sector

2017 2018p 2019p

M1~6 M6 M1~6 M5 M6

Buildings (Mtoe) 46.8 48.7 26.7 2.8 26.1 3.0 2.8

(4.2) (4.1) (7.0) (3.1) (-2.0) (0.3) (-0.2)

Residential 22.5 23.3 13.5 1.0 13.1 1.2 1.0

(3.7) (3.7) (7.4) (1.8) (-3.2) (-1.8) (-1.8)

Commercial 17.4 18.0 9.4 1.3 9.2 1.2 1.2

(2.2) (3.5) (5.8) (3.4) (-1.9) (0.1) (-0.4)

Public·others 6.9 7.4 3.8 0.6 3.8 0.6 0.6

(11.0) (6.7) (8.3) (4.9) (1.7) (5.8) (3.2)

Heating degree days 2 517.1 2 597.8 1 616.9 - 1 511.5 20.3 -

(5.5) (3.2) (6.4) (-100.0) (-6.5) (-46.0) -

Cooling degree days 132.7 209.0 3.5 3.5 - - -

(-13.9) (57.5) (45.8) (45.8) (-100.0) - (-100.0)

► Energy consumption in the buildings sector & major indicators

KEEI Monthly Korea Energy Trends No.90

KEEI

MONTHLY

KOREA ENERGY TRENDS

2019 / 09

PETROLEUM -4.9%

COAL -1.9%

LNG -13.3%

NUCLEAR 20.2%

NEW & RENEWABLE 10.5%

KOREA ENERGY ECONOMICS INSTITUTE

Table of Contents

1. The Economy and the Industry

2. Energy Prices

3. Energy Supply

4. Energy Consumption

5. Coal

6. Petroleum

7. Gas

8. Electricity

9. Nuclear

10. Heat and Renewable energy

11. Industry

12. Transport

13. Buildings