Additional Counter Seasonal Buying Not Large Enough to Support Spot Prices
PIRA estimates that buying in counter-seasonal markets (
Another Bearish EIA Storage Surprise
Another stouter-than-anticipated injection was reported in today's EIA storage update. In addition to being considerably larger than both the year-ago figure (94 BCF) and the five-year average (81 BCF), the 110 BCF build was 5-7 BCF above consensus expectations owing to stronger indicated refills in the East and Producing regions.
Supply Cuts Becoming An Imperative in
Additional supply cuts will have to come if spot prices are to remain anywhere near where they are today. Even before factoring in year-on-year demand losses, the third quarter is the lowest demand period of the year, with consumption dropping another 150-200 MMCM/D versus the second quarter. Typically, this decrease in use would be offset by an increase in storage injections. This year, such increases will not be possible due to capacity constraints, and PIRA is forecasting a decrease in quarter-on-quarter injection rates out of sheer necessity.
Utilization of German Coal Capacity Faces Further Uncertainty
German net power exports set a new historical high during June, but this peak was not enough to push coal-fired dispatching much off of multi-year lows for this time of the year. A mere 10 GWs were needed on average, while 2.3 GWs of new coal capacity has been connected to the grid so far this year. With stagnating power demand and policy-driven supply growth, German coal-fired generators will continue to face increasing uncertainty over the amount of running hours in the upcoming years.
U.S. Coal Stockpile Estimates
Coal stocks saw a typical June draw as the summer burn season began, lowering U.S. electric power sector (EPS) coal inventories to 127 MMst as of the end of this month or 45 days of forward demand (versus 64 days one year ago).
Panamax Freight Rates Suffer Worst Decline in Years
The eye-catching story last month was the sudden collapse in
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