PIRA Energy Group's Weekly Natural Gas, Power and Coal Market Recap for the Week Ending October 12th, 2014

Share Article

India’s Bargain Buying Offers Peak into Future Spot Trade, while Slight Shift in the Marginal Plants Under the Flow-Based Market Coupling

News Image
In a recent webinar for PIRA's multi client study, "Regulating Carbon: Impacts of the EPA’s Clean Power Plan Options", PIRA reviewed Clean Power Plan details, challenges, timelines and prospects. Key issues and decisions for states were identified...

NYC-based PIRA Energy Group believes that India’s bargain buying offers peak into future spot trade. In Europe, commercial flows manage to dodge chaos, but risk remains real. Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:

India’s Bargain Buying Offers Peak into Future Spot Trade

The question of opportunistic buying remains a compelling one in the LNG trade. When it does not occur (China, with one exception, for example) is as interesting and telling about the future of LNG importing as when it does (India). In India, year-on-year growth over the past three months has been very strong and the data suggesting opportunistic buying also brings to bear the notion of a supply push as opposed to an opportunistic demand pull. No question the bulk of the incremental volumes to India are sourced from Qatar, which has had enormous difficulties placing incremental volumes in other premium-priced Asian markets and to some extent in Europe, where outside of the U.K. and Turkey, Qatari volumes are being re-exported as quickly as they come in.

Commercial Flows Manage to Dodge Chaos, But Risk Remains Real

As expected, day-ahead prices continue to creep higher in Europe, and we expect this trend to continue in the short term. At the same time, winter prices on the forward curve have edged down as they begin to converge with the spot price. This week’s brief disruption of Libyan flows into Italy magnifies what is already a major issue as winter approaches: the disconnection between commercial gas flows and the broader political changes affecting the suppliers of the gas.

India’s Domestic Gas Price Could Depend on Quality

The new price for India's domestically produced gas is likely to be based on the gross heat value. If it is based on the gross calorific value (GCV), the prices would go up automatically by 10%, which would be advantageous for the producers. “The government wants to ensure that the final pricing mechanism is fair to all — the buyers and the sellers — while not affecting the government’s share of profit,” an official privy to the development said.

NYC-based PIRA Energy Group reports that slight shift in the marginal plants under the flow-based market coupling. China’s 6% thermal coal import tax a bane for Australian producers. Specifically, PIRA’s analysis of electricity and coal market fundamentals has revealed the following:

Slight Shift in the Marginal Plants Under the Flow-Based Market Coupling

While the introduction of the Flow-Based Market Coupling is slated to be now implemented in spring 2015, an analysis of the simulation results published on a daily basis by CASC shows some interesting changes in the technologies or marginal plants setting prices in both French and German markets.

China’s 6% Thermal Coal Import Tax a Bane for Australian Producers

A fresh wave of bearishness swept the coal market last week, with the somewhat unexpected announcement of a 6% tax on imported coal into China as well as a notable decline in equity and other commodity markets. 4Q14 FOB Newcastle (Australia) forward prices declined notably, although losses for Cal-15 were more pronounced. Price declines also extended to the Atlantic, although they were generally less severe than FOB Newcastle. PIRA will be cutting the 2015 China import forecast considerably due to the tax,
particularly for imports from Australia.

Regulating Carbon: Impacts of the EPA’s Clean Power Plan

In a recent webinar for PIRA's multi client study, "Regulating Carbon: Impacts of the EPA’s Clean Power Plan Options", PIRA reviewed Clean Power Plan details, challenges, timelines and prospects. Key issues and decisions for states were identified, given tight timetables and uncertain guidance from EPA. PIRA’s modeling approach and assumptions were highlighted along with illustrative examples of policy decisions and interactions. It concluded with a regional and state review of PIRA’s preliminary modeling runs, consideration of RGGI and California programs and overall projected outcomes.

The information above is part of PIRA Energy Group's weekly Energy Market Recap - which alerts readers to PIRA’s current analysis of energy markets around the world as well as the key economic and political factors driving those markets.

Click here for additional information on PIRA’s global energy commodity market research services.

PIRA Energy Group
3 Park Avenue, 26th Floor
New York, NY 10016
212-686-6808
sales(at)pira(dot)com

Share article on socal media or email:

View article via:

Pdf Print

Contact Author

Media Relations
PIRA Energy Group
+1 (646) 448-6395
Email >
@PIRAEnergyGroup
Follow >
PIRA Energy Group
Like >
Visit website