From S&P Global Platts, November 2:
Commodity Tracker: 5 charts to watch this week
A triple bill of European power and gas market trends, kicks off this edition of Commodity Tracker ahead of S&P Global Platts Analytics' Virtual Client Seminar, London. Our news and pricing editors also look at the plight of Australian refineries, and developme nts in the met coal market amid high Chinese steel output.
1. After lignite, coal increasingly in the money in Germany
What's happening? Recent movements in commodity prices have consolidated the trend that emerged in September, when high gas prices brought German lignite back in the money, and have also started to shift the outlook for coal plant: the most efficient are now moving ahead of mid-level gas ones in the supply stack.
What's next? The improved outlook for coal plants translates into a month-on-month uplift of 25% in S&P Global Platts Analytics' forecast for coal generation across western Europe over the winter, with limited upside risk at this point given the recovery in French nuclear and above-average European hydro stocks, but material risks to the downside. The announcements of new coronavirus-related restrictions in France, Italy, Belgium and Germany at the end of the October could lead to power demand losses that are likely to affect coal dispatch more than gas or lignite, with the easing of tightness in the European coal supply fundamentals offering limited support to balance it.
2. EU CO2 caught between short-term fundamentals, long-term reform
What's happening? The EU carbon price fell to a four-month low of Eur22.88/mt Oct. 28. The recent weakness was driven by worries over demand due to the renewed coronavirus lockdowns across Europe, which dragged the wider energy complex lower, as well as strong carbon auction supply from governments in the fourth quarter.
What's next? Traders will be watching closely this week to see if the lower prices attract buyers back into the market, with carbon still caught between short-term weak demand and expectations of longer-term tighter supply as Europe pushes for stronger emissions targets out to 2030. Seasonal factors could also come to the fore, with any arrival of colder winter weather likely to provide support for power, generating fuels and carbon.
Go deeper: Infographic – EU to revamp Emissions Trading System post-2020
....MUCH MORE
HT: ZH
