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Watch: Market Movers Americas, Feb 14-18: US energy infrastructure in focus with FERC decision, exports squeeze

  • Featuring
  • Chris Newkumet
  • Commodity
  • Electric Power Natural Gas Petrochemicals
  • Length
  • 04:56
  • Topic
  • Natural Gas In Transition US Policy

In this week's Market Movers Americas, presented by Chris Newkumet:

• FERC looks to change pipeline authorization policy (00:27)

• Aframax boom sustained amid tight positions, exports (01:21)

• Logistics logjams hinder US resin exports (02:09)

• Update on nuclear power plant expected (02:59)

• Mills, foundries lower Brazil ferrous scrap prices (03:45)

View Full Transcript

In this week's Market Movers: US energy regulators may update gas pipeline authorization policy; the Southeast power market awaits word on a major nuclear plant startup; a booming Aframax segment dominates the Americas dirty tanker market; Brazilian scrap steel prices slide; and logjams hinder US exports of key petrochemicals.

Eyes in Washington this week will be on the US Federal Energy Regulatory Commission, which is poised to make long-awaited and significant updates to the process for authorizing major interstate natural gas pipeline projects. At the February 17 open meeting, Chairman Richard Glick will look for votes to adopt changes that could have major implications for pending and future infrastructure projects. Also on the agenda is a new policy on considering and mitigating greenhouse gas emissions in gas infrastructure projects. Stakeholders in the energy community are sharply divided on whether FERC has the authority to order such mitigation.

This brings us to our social media question of the week: Is FERC overstepping, or is mitigating GHG emissions within its purview? Tweet us your thoughts using the hashtag #PlattsMM.

Attention in the Americas dirty tanker market is focused on the booming Aframax segment, where freight trade levels last week rose at least 13.5 Worldscale points to worldscale 35 on key routes from the prior week. Market participants are expecting freight to hold in the coming week as a drained position list couples with active US Gulf Coast crude exports, which clocked in at just over 3 million b/d in the first week of February. This sentiment has been reflected by the 70,000-metric-ton U S G C to U K C Forward Freight Agreement market, in which the backwardation widened from February to March.

Logistics logjams are expected to hinder US exports of several resins for the foreseeable future despite normalizing supply availability. US exports of polyethylene, polypropylene, and polyvinyl chloride plunged nearly 38% on year in 2021, in large part because of severe weather events that forced major production outages. Market sources say an influx of containerized finished goods, largely from Asia, is using up an already short supply of truck drivers needed to move packaged resin from warehouses to ports. The squeeze leaves packaged resin taking up warehouse space, which could force producers to reduce operating rates until the backlogs clear.

In power, clarity on the startup of Georgia Power's third Vogtle nuclear reactor is expected during Southern Company's quarterly earnings call February 17. The latest Georgia Power update indicates the 1,117-megawatt Unit 3 should go online in the third quarter, but Georgia regulatory staff and independent construction monitors suggest it may happen as late as February 2023. Adding so much capacity to the Southeast power market would likely weaken wholesale prices, but so far in 2022, the Into Southern on-peak forward curve for July through December is up nearly 12%.

And turning to Brazil, domestic mills and foundries have announced a scrap price decline for all grades of up to Real 150 per metric ton for February deliveries amid a well-supplied market. While dealers have mostly absorbed a price cut of Real 80 per metric ton, general sentiment points toward additional drops through the month, pushed by recent discounts applied on finished steels locally. Still, limited scrap export options due to a lack of containers in the region and high logistics costs overall have kept material in-house. Though clean steel scrap generation remains scarce amid the automotive sector's slow recovery, the new pricing cuts are expected to reduce the spread between prime and obsolescent grades, which has widened since mid-2021.

The Platts Atlas of Energy Transition is your map to the sustainable commodity markets of the future. You can explore the Atlas by visiting the address displayed on your screen. Thanks for kicking off your Monday with us and have a great week ahead.