Power, coal, carbon prices rise on German election

Mon Mar 28, 2011 12:13pm GMT
* 2012 power prices at highest since late 2008
* Carbon, coal gain 2 pct
* Market expects oldest nuclear reactors to stay offline

By Karolin Schaps and Henning Gloystein

LONDON, March 28 (Reuters) - European energy prices jumped on Monday as a key Green Party victory in German state elections underlined concerns that widespread anti-nuclear sentiment may permanently shut Germany's oldest reactors.

German baseload electricity contract for 2012 rose BY1DE-1Y to its highest since before the global financial crisis slashed power prices in late 2008, while the price of coal for delivery into Europe next year ICPAP2YZ2 and for permits to emit climate-warming carbon both rose nearly 2 percent. CFI2Zc1

"The power market is taking the view that certain plants are not coming back. If there is a hard, fast decision (on keeping reactors offline) prices would go in an upwards trend," said Martin Young, Executive Director for Equities Research at investment bank Nomura.

The surge in prices comes after Japan's nuclear disaster prompted Chancellor Angela Merkel to impose a three-month moratorium on her coalition government's decision to extend the lifetime of Germany's nuclear reactors, which helped steer the anti-nuclear Greens to control of Baden-Wuerttemberg at the weekend elections.

Seven nuclear reactors shut down following the moratorium in place until at least June, but German power traders believe the loss in political support for nuclear power in Baden-Wuerttemberg will lead to the permanent shutdown of the two oldest reactors located there -- Philippsburg I and Neckarwestheim I -- and other shutdowns will follow quickly.

"I think this now increases the likelihood that Neckarwestheim I and Philippsburg I do not come back after the moratorium and that the other units are phased out quickly," a London-based energy analyst at an investment bank said.

Environment minister Norbert Roettgen, a close Merkel ally, fuelled the debate on Monday as he called for a quicker shutdown of Germany's nuclear reactors. [ID:nLDE72R0JT]

BULLISH FOR CARBON, POWER

The benchmark contract for EU Allowances CFI2Zc1 rose as high as 17.35 euros a tonne early on Monday, the highest in eight days, while coal prices for year-ahead delivery rose above $130 per tonne, maintaining highs seen last week.

"Getting rid of old nuclear plants means plants will run more coal and gas. That means around 70 million tonnes of extra carbon dioxide will be emitted and carbon is up on this prospect for now. The question is how much is this worth in terms of additional carbon price?" said Emmanuel Fages, analyst at Societe Generale/orbeo.

European Energy Commissioner Guenther Oettinger, who before his position in Brussels was Prime Minister of the state of Baden-Wuerttemberg, also supported the view that coal will act as a substitute to nuclear in Germany.
UTILITIES, RENEWABLES GAIN

Share prices in German utilities rose on the back of high gains in power prices and the prospect that utilities may be able to see higher returns from coal and gas plants to substitute the loss in nuclear capacity. Shares in utility RWE (RWEG.DE: Quote) initially fell on Monday but rebounded later to rise 0.43 percent above Friday's close to 44.88 euro at 1055 GMT on Monday, while shares in E.ON (EONGn.DE: Quote) were down 0.16 percent.

Renewable energy shares in Germany continued their strong gains and the OekoDAX , one of the country's biggest renewable stocks was up 6.5 percent on Monday, while the S&P Global Clean Energy Index .SPGTCLEE was up 1.9 percent.

Renewable stocks have soared since Japan's March 11 earthquake and tsunami which damaged nuclear power reactors and caused radioactive leaks.

The global backlash against nuclear power has boosted the outlook for renewable energy as governments ponder their nuclear options.

The election outcome in Baden-Wuerttemberg on Sunday is likely to mean an end to the 58 year long rule in the state of chancellor Angela Merkel's conservative CDU party.

This is likely to leave the anti-nuclear Green Party in control of the utility EnBW (EBKG.DE: Quote), which operates four nuclear reactors, two each at Neckarwestheim and Philippsburg.

It would be the first time that the Green Party has headed a state government in Germany.

The CDU's pro-nuclear policies, which included buying a majority stake in EnBW last year, were punished by Baden-Wuerttemberg voters after the nuclear crisis in Japan.

The opposition Greens claimed about around 25 percent of the vote and will likely form a coalition with the Social Democrats, who took around 23 percent of the votes.

Nuclear fears shut 25 embassies in Tokyo

March 23, 2011 8:47PM

THE nuclear emergency following the earthquake and tsunami in Japan has led 25 embassies to temporarily shut their doors in Tokyo, Foreign Minister Takeaki Matsumoto said today.

As of yesterday; "eight of them had transferred their functions outside Tokyo or Japan", Matsumoto told AFP by email.

"The rest have had their staff stay home. They have been changing its working arrangement day by day," he said.

"At any rate, the Ministry of Foreign Affairs keeps in touch with the embassies temporarily transferred or embassy staff staying home, providing accurate information to the entire diplomatic corps."

Nearly two weeks after the double disaster ravaged the country's Pacific coast on March 11, workers were battling to avert catastrophe at a crippled nuclear power plant, located 250 kilometres northeast of Tokyo.

The foreign ministry's press division said the following countries had closed their doors: Angola, Bahrain, Benin, Botswana, Burkina Faso, Croatia, Dominican Republic, Ecuador, Finland, Germany, Ghana, Guatemala, Kenya, Kosovo, Lesotho, Liberia, Libya, Malawi, Mauritania, Mozambique, Namibia, Nepal, Nigeria, Panama and Switzerland.

The US State Department last week authorised the "voluntary departure" of embassy family members in Tokyo, including relocation to other areas within Japan.

U.S. halts Japan food imports, Tokyo water contaminated

Wed Mar 23, 2011 6:41am GMT

* U.S. to block milk, fruit, vegetable imports
* Radiation dangerous for infants in Tokyo water
* Engineers battling to stabilise Fukushima reactors
* Earthquake, tsunami left nearly 23,000 dead or missing

By Mayumi Negishi and Kazunori Takada

TOKYO, March 23 (Reuters) - Radiation danger from Japan's tsunami-smashed nuclear plant loomed on Wednesday with water in Tokyo showing hazardous levels for infants and the United States becoming the first nation to block food imports.

Tokyo authorities said water at a purification plant for the capital of 13 million people had 210 becquerels of radioactive iodine -- more than twice the safety level for infants.

"This is without doubt, an effect of the Fukushima Daiichi plant," a Tokyo metropolitan government official said, in reference to the damaged nuclear plant 250 km (150 miles) north of the city.

Tokyo governor Shintaro Ishihara, however, said the radiation level posed no immediate health risk and water could still be used.

"But for infants under age one, I would like them to refrain from using tap water to dilute baby formula," he said.

Crystallising international concern, the U.S. Food and Drug Administration said it was stopping imports of milk, vegetable and fruit from four prefectures in Japan's crisis-hit northeast.

South Korea may be next to ban Japanese food after the world's worst atomic crisis since Chernobyl in 1986. France this week asked the European Commission to look into harmonising controls on radioactivity in imports from Japan.

At the six-reactor Fukushima plant, crippled by a March 11 earthquake and tsunami, engineers are battling to cool reactors to contain further contamination and avert a meltdown.

In a rapidly widening problem, Japan said on Wednesday above-safety radiation levels had been discovered in 11 types of vegetables from the area, in addition to milk and water.

Officials still insisted, however, that there was no major danger to humans and urged the world not to over react.

"We will explain to countries the facts and we hope they will take logical measures based on them," Japan's chief cabinet secretary Yukio Edano, who has been the government's public face during the disaster, told a news conference.

The Asian nation's worst crisis since World War Two may have caused $300 billion damage, sent shock waves through global financial markets, and left nearly 23,000 people dead or missing, mostly from flattened coastal towns.

More than a quarter of a million people are living in shelters, while rescuers and sniffer dogs comb debris and mud looking for corpses and personal mementoes.

Worsened by widespread ignorance of the technicalities of radiation, public concern is rising around the world and radioactive particles have been found as far away as Iceland.

Japan has already halted shipment of some food from the area and told people there to stop eating leafy vegetables.

Asian neighbours are inspecting imports for contamination, and Taiwan advised boats to stop fishing in Japanese waters.

Although there has been progress in restoring power to the Fukushima site 13 days after the accident, plant operator Tokyo Electric Power Co (TEPCO) said it needed more time before it could say the reactors were stabilised.

DRAMA AT FUKUSHIMA

Technicians working inside an evacuation zone around the plant have successfully attached power cables to all six reactors and started a pump at one to cool overheating nuclear fuel rods.

Concern is high over reactor No. 1 after its temperature rose to near 400 degrees Celsius, above a design limit of 302.

As well as having its workers on the front line in highly dangerous circumstances, TEPCO is also facing accusations of a slow disaster response and questions over why it originally stored more uranium at the plant than it was designed to hold.

Vienna-based U.N. watchdog, the International Atomic Energy Agency (IAEA), expressed concern about a lack of information from Japanese authorities. It cited missing data on temperatures of spent fuel pools at the facility's reactors 1, 3 and 4.

"We continue to see radiation coming from the site ... and the question is where exactly is that coming from?" said a senior IAEA official, James Lyons.

U.S. Defense Secretary Robert Gates said he was concerned about radioactive fallout affecting the U.S. 55,000 troops in and around Japan, many involved in a massive relief operation for Washington's close ally. "We're also deeply concerned about the wellbeing of our Japanese allies," he said.

Experts said tiny traces of radioactive particles, measured by a network of monitoring stations as they spread eastwards from Japan across the Pacific, North America, the Atlantic and to Europe, were far too low to cause any harm to humans.

"It's only a matter of days before it disperses in the entire northern hemisphere," said Andreas Stohl, a senior scientist at the Norwegian Institute for Air Research
GLOBAL IMPACT

The Japan crisis has dealt a blow to the nuclear power industry around the world. Italy became the latest nation to re-assess its programme, announcing a one-year moratorium on site selection and building of plants.

Crisis in the world's third-biggest economy -- and its key position in global supply chains, especially for the auto and technology sectors -- has added to global market jitters, also affected by conflict in Libya and unrest in the Middle East.

Asian shares fell on Wednesday, with Tokyo's Nikkei shedding more than 1 percent as investors took profits from a two-session bounce. Japanese stocks are about 8 percent below their close on the day the 9.0 magnitude earthquake struck.

Toyota said it would delay the launch in Japan of two additions to the Prius line-up, a wagon and a minivan, from the originally planned end-April due to production disruptions.

The tsunami and earthquake are the world's costliest ever natural disaster, with the government estimating damage at 15-25 trillion yen ($185 billion-$308 billion.

The upper end of that range would equate to about 6 percent of Japan's gross domestic product.

The official death toll has risen to 9,199, but with 13,786 people still reported missing, it is certain to rise.

There are reports dozens of survivors, mostly elderly, have died in hospitals and evacuation centres due to a lack of proper treatment, or simply because of the cold. It is winter in Japan.

At one sports arena in Minamisanriku where 1,500 evacuees are staying, old people crowded at a counter stacked with pills and bandages, while about 30 people slept on beds or on the floor in a makeshift clinic with doctors on standby.

"It's less a problem of medical supplies now, but a problem of finding out what medicine is lacking where and centralising that information," said Nobuyuki Maki, a doctor.

"Many places in this area haven't restored mobile phone connections yet so there are still problems with communication."

Indonesia not ready for building nuclear plant: minister

Sat, Mar19, 2011 14:59:57

Jakarta, March 19 (Xinhua) -- Indonesia is not ready to build nuclear power plants due to human resources issues and public opposition, the Jakarta Post quoted a minister as saying on Saturday.

Environment Minister Gusti Muhammad Hatta said that nuclear power plants should be the last resort since the country still had several energy option.

Gusti's statement comes as the National Atomic Energy Agency ( BATAN) insists on going ahead with its nuclear plant program despite mounting opposition.

"There's no need to hurry to build a nuclear power plant except if we start running out of energy resources," he told the daily on Friday.

He said that Indonesia could explore cleaner energy options such as geothermal, wind or water to power electricity plants.

Aside from problems with the supply of raw materials, the government needs to ensure the public about the security aspect following Japan's ongoing nuclear crisis, he said.

"It is not easy to ensure a public that is skeptical about nuclear reactors in Indonesia," he added.

Under the 2009 Environmental Law, Gusti's office is responsible for issuing environmental impact analysis documents for strategic businesses, including for nuclear power plants.

The nuclear crisis in Japan, triggered by the 9.0 Richter scale- earthquake, has forced the Japanese government to evacuate an area up to 30 km from the plant site.

Like Japan, Indonesia is located within the ring of fire that is prone to earthquakes.

BATAN Head Hudi Hastowi has insisted that the office would go ahead with the plan since it had been mandated by law. Editor: Zhang Xiang

Implications of the Japan Crisis on steel, coal, shipping industry

Mar16, 2011

In the aftermath of the devastating earthquake that has hit Japan, fears are growing over the potential for radiation leaks from damaged nuclear plants. Equity markets have been hit while FFA prices have also sustained significant losses. With the situation still unfolding, the longer term impact of the disaster on commodity markets is unclear, although some initial conclusions can be drawn.

In the short term, shipping has been disrupted with 13 ports reported by Reuters to have closed, with some of these unlikely to be operational for several months or even years. Initial assessments by Macquarie and the Steel Index put production at five large steel mills in the worst-affected region at risk, accounting for 15-18 million tonnes (Mt) of annualized steel production capacity. That could potentially remove around 20-25 Mt of iron ore and 9-10 Mt of coking coal demand.

In the longer term, reconstruction should boost demand for steel with potential for significant increases in raw material imports. Whether the additional steel demand is met entirely by Japanese production or partially by China, Korea and/or Taiwan, the overall effect should be a boost to iron ore and coking coal imports into the region. Capesize vessel demand would therefore be the biggest beneficiary, with the Panamax sector boosted by extra coking coal demand alongside additional Handysize and Supramax employment on steel products, timber and grain trades. Should additional cargoes be required into China, this would entail more spot market chartering activity, in contrast to Japan’s traditional reliance on longer term freight contracts.

Meanwhile the nuclear crisis has led to rolling blackouts. Out of Japan’s 54 nuclear reactors, 11 are reported closed. The Fukushima Daiichi nuclear plant has so far suffered explosions at three of its reactors and it will almost certainly be decommissioned once the crisis is over. Japan depends on nuclear power for almost a third of its total energy needs. Recent parallels can be drawn with the closure of the Kashiwazaki-Kariwa nuclear plant for 21 months after the 2007 earthquake in Niigata prefecture and, perhaps more significantly, the temporary shutdown in 2003 of 17 nuclear power stations for emergency safety inspections after it was revealed that inspection reports had been falsified.

The 2003 closures led to an increased reliance on both oil and coal-fired power generation. There was an unexpected spike in Japan’s steam coal imports (including anthracite) in July and August 2003 to more than 15 Mt per month compared to an average of 14 Mt per month during the 1h03. This was a key factor in causing the chronic shortage of dry bulk tonnage at that time that led to the record-breaking surge in freight rates.

The rolling programme of emergency inspections in the months that followed led to a very gradual reopening of nuclear plants, which helped to ensure that Japan’s steam coal demand grew strongly. Combined steam coal and anthracite imports jumped from 112.0 Mt in 2003 to 123.6 Mt in 2004. Improved economic conditions in 2010 resulted in the annual import total rising by 14.1 Mt over 2009 to 131.2 Mt. Beyond the inevitable short-term disruptions, there is potential for further strong rises in steam coal demand. This could be particularly significant in the longer term if the latest tragic developments cause a rethink in Japan of the viability of nuclear generation as a key part of the country’s energy mix. (By Marinelink)

Xstrata resumes some operations at Australia coal mines

PERTH, Wed Feb 2, 2011 10:11pm EST

PERTH Feb 3 (Reuters) - Xstrata said on Thursday that it has resumed operations at its Newlands coal mine, which was shut Wednesday night due to Cyclone Yasi, and is preparing to resume operations at its Collinsville coal mine where the cyclone knocked out power.
Collinsville mine will resume operations as soon as power is restored, an Xstrata spokesman said.
Abbot Point Coal Terminal, which is operated by Xstrata, was also affected by the power outage. (Reporting by Rebekah Kebede; Editing by Ed Davies,sourced:reuters)

Energy commodity report: January 14, 2011

January 14, 2011

All prices unless otherwise stated are for the close of January 13.2012 baseload German power: €53.25/MWh, down 1.11%2012 CIF ARA Coal: €119.32/t, down 0.51%Front month UK natural gas: GBp56.35/therm, down 0.79%EU emission allowances (EUAs) for December 2011 delivery: €14.28/t, up 0.21%Certified Emission Reduction(s) (CERs) for December 2011 delivery: €10.90/t, down 0.27%Brent crude oil futures for front-month 2010 delivery: US$98.45/bbl, up 0.4% as of GMT 8:45, January 14WTI crude oil futures for front-month 2010 delivery: US$90.97/bbl, down 0.3%, as of GMT 8:45 January 14
Latest buzz
Oil traders experienced a muddled day of trading on Thursday, as an increase in new jobless claims in the US, weighed on the market, causing benchmark crude for February delivery on the NYMEX to hit an intraday low of US$90.75/bbl and prompting profit-taking. As the day went on, a stronger euro, pushed up by a €5bn Spanish debt auction, pushed the US dollar lower, allowing the commodity to recover most of its earlier losses. As a result, oil settled down US$0.46 at US$91.40/bbl, after an intraday high of US$92.37/bbl. First-time claims for unemployment benefits rose by 35,000, the largest weekly increase seen in six months, to 445,000 in the week ended January 8.e
As of writing, Brent crude has returned to the same level it was trading at this time yesterday. The spread between New York and Brent crude is now an impressive US$7.87/bbl, owing much to a leak on the Trans Alaska pipeline, given that Brent is delivered by sea, while WTI is physically delivered via pipeline to the landlocked hub at Cushing, Oklahoma.
Alyeska Pipeline Service Co intends to shut the Trans Alaska pipeline system today to install a by-pass and stop a leak on the line. The pipe will close at 18.00h and may be shut for as long as 48 hours, according to a statement from the company. During this time, a section will be put in so that crude can be transported around a breach at pump station 1. The pipeline was temporarily restarted on January 11, to prevent freezing within the pipe. The situation has forced BP, ConocoPhillips and Exxon Mobil to shut-in 95% of their production from the North Slope area. As of mid-day Thursday, the pipeline was transporting crude at a rate of around 320,000bbl a day, roughly half its full capacity.
Norway has dramatically cut its estimate of undiscovered or unproven oil reserves, by 21%, from 20.8bnbbl boe to 16.4bn boe, compared to 2006 after disappointing drilling results. Oil production fell in 2010 by 10% YoY, while proven oil reserves have fallen from 5.2 to 4.8bnm3. The Norwegian Petroleum Directorate (NPD) said that the discovery of proven reserves equal to around 400mm3 of oil equivalent over the past five years had contributed to the revision, together with “disappointing drilling results” in deep-water areas of the Norwegian Sea. Norwegian oil production is now expected to fall by 5.8% in 2011. The news has prompted oil officials to call for more debate over opening up the Lofoten region in the Arctic to oil exploration. The region currently remains off limits due to environmental concerns and its importance to the fishing industry. On the positive side, natural gas sales rose by 3% in 2010 to 105.6bnm3 and are expected to rise to 109.1bn3 in 2011 and 112.2bnm3 in 2015. Some positive potential comes from an agreement made between Norway and Russia over the much disputed Barents Sea. Should this area be opened up for exploration, there is a chance that large discoveries could be made once more.
Natural gas for February delivery on the NYMEX dropped by US¢13, or 2.7%, to US$4.41/MBtu on Thursday, weighed down by the combination of disappointing US employment data and a distinct lack of bullish sentiment on the global financial markets. The news that 138bnft3 of gas was withdrawn from storage in the week ending January 7 (according to a EIA report), appears to have little impact. The drawn-down was slightly below some analysts’ expectation, but was still significantly above the five-year average of 108bnft3. Also weighing on the market was the growing consensus among forecasters that the US will see a general shift to milder weather towards the end of this month, which will reduce heating demand.
Australian thermal coal prices, traded at close to US$140/t on Thursday, with support coming from the flooding situation in Queensland. Thermal coal on the globalCOAL Newcastle index for the week to date, finished at US$138.58/t, up US$9.08 WoW. The index hit a high of US$141.25/t on Monday and traders have reported that recent spot prices have climbed as high as US$143.50/t. Meanwhile, India’s coal minister, Sriprakesh Jaiswal, has said that Indian coal imports may double over the course of this year to 104Mt in the year ending March 2012, while Helen Lau at UOB Kay Hian Ltd has predicted that Chinese purchases of international coal could rise by 30%, to 210Mt in 2011. Yesterday saw South Korea’s five utilities look for 1.2Mt of thermal coal in the spot market for February and March to reduce the risk from further shipment delays. Buyers have been turning to Indonesia, Colombia and South Africa to make up for the shortfall, but the latter two countries are suffering from supply disruptions themselves due to weather and logistical constraints.
Yesterday saw prompt physical coal prices for delivery into Europe fall by around US$2.00/t. Two March delivery DES ARA cargoes traded via brokers at US$127.00/t and US$127.50/t, down US$2.00, while a March DES ARA cargo was bid at US$127.00 and offered at US$127.50, also down US$2.00, according to Reuters.
Over in China, thermal coal with a heating value of 5500kCal/kg traded at CNY780-790/t (US$118-119.68/t), while inventories at the port of Qinhuangdao fell by 1.3% to 6.95Mt on week. The situation in Australia has prompted the return of some Chinese coal miners, such as Shenhua Group and China National Coal Group to the overseas spot market. They appear to be exercising some restraint in terms of volume in an effort to not depress prices. Unfortunately for the rest of the market, a 10% export tax, means that such companies are only interested in selling premium bituminous coal, further limiting volumes.
The Dec11 EUA contract hit an intraday low of €14.17/t, prior to the UK government’s auction of 4.4M EUAs. The auction cleared at €14.00/t with a cover ration of 6.61. The news, released just after 10:00am GMT, caused the contract to hit an intraday high of €14.40/t, before a weakening energy complex fuelled bearish sentiment. Yesterday saw the issuance of 4.23M CERS to 45 CDM projects, pushing down the value of all CER contracts. The Dec11 CER-EUA spread widened by €0.05 to -€3.38 and the Dec12 spread widened by €0.08 to -€3.89.
Source: IFandP Newsroom