Monday, June 14, 2021

Platts' "Commodity Tracker: 4 Charts To Watch This Week"

 From S&P Global Platts:

Commodity markets continue to watch US inflation data closely, while Asian oil refiners wait for developments in US-Iran talks that would allow a resumption of the latter country's crude flows. Plus, UK nuclear power and winter capacity, and South American soybean oil prices.

3. Another hit for UK power generation as Dungeness B closes early

UK Day-ahead baseload price

What's happening? UK nuclear generator EDF Energy closed its 1.25-GW Dungeness B nuclear plant with immediate effect June 7, throwing in the towel on efforts to keep the ageing plant going to 2028. The duel advanced gas-cooled reactor (AGR) power station in Kent had been offline since September 2018 due to "significant and ongoing technical challenges." In particular, changes to the condition of hard-to-access boilers within the reactors themselves contributed to a final decision to close the site.

What's next? While market players said Dungeness B's absence had been priced into winter 2021-22 contracts, its closure adds downside to the UK's deteriorating dispatchable plant outlook. Adding the early closure of reactors at Hunterston B and Hinkley Point B by the middle of 2022, UK installed nuclear capacity will have fallen by a third from current levels to 6 GW by end-2022. "With Calon's gas fleet expected to be out of action this winter and the Drax and West Burton coal plants only available in extreme conditions, we are likely to see a repeat of last winter's extreme prices (see chart) in the event of cold, still weather, particularly if power demand recovers from the lockdown-limited levels seen last winter," said S&P Global Platts Analytics' head of European Power Analysis, Glenn Rickson....