In this week's highlights: The UK has been seeing long queues at petrol stations as consumers panic-buy, the NSL power interconnector starts commercial operations, Germany coalition talks are set to keep climate targets at the fore, a PVC producer is to start applying energy surcharges, and the European metal sector meets in Lisbon.
- Panic buying in the UK
- Norway to the rescue as NSL enters operation
- German coalition talks loom
- PVC producers to charge electricity surcharge
- Eurometal assesses tough global environment
In this week's highlights: The NSL power interconnector starts commercial operations, Germany coalition talks are set to keep climate targets at the fore, a PVC producer is to start applying energy surcharges, and the European metal sector meets in Lisbon.
But first to oil, where in the UK we've been seeing scenes reminiscent of the 1970s with long queues outside fuel stations as consumers panic-buy. The industry says there are no fundamental problems with fuel supply and that the issue is a logistical one, caused by a severe shortage of truck drivers to get the fuel to retail stations. But those reassurances haven't cut through with the public, and a solution will need to be found quickly if the driver shortage isn't to cause a difficult winter ahead in the UK, with warnings of empty supermarket shelves looming in the headlines.
Turning to the fundamentals, Brent futures have been nudging three-year highs on a demand resurgence, combined with upstream disruption. On the supply side, upstream output continues to be hampered by disruptions in Libya, and in particular the US Gulf of Mexico following Hurricane Ida.
Prices are also being supported by Europe's gas crunch, which is raising expectations of some switching to oil combustion for power generation in the winter months.
Turning to power, commercial flows on the UK's new 1.4 gigawatt interconnector to Norway - the North Sea Link, or NSL - are due to start on Friday with a first auction of capacity to be held the day before.
Capacity will be restricted to 700 megawatts initially, but every single watt will be welcome following the recent fire that took out one of the UK's two subsea power links to France.
The UK will also be hoping the current resurgence in wind power continues into late September, easing demand on eye-wateringly expensive gas-fired generation.
The sky-high cost of gas feedstock has seen ageing, polluting coal plants pulled into the wholesale and balancing markets, raising questions about what happens next winter when the UK's remaining coal units, Drax and West Burton A, are scheduled to close for good.
In Germany, meanwhile, a new redispatch regime for renewables takes effect on October 1st, aimed at improved integration of the massive swings in wind output, especially during the winter.
Germany's main political parties are expected to start exploratory coalition talks this week following Sunday's election.
The current rally in gas prices could influence talks on how Germany sets about achieving its new climate target, which is to cut emissions by 65% by 2030 versus 1990 levels.
And that takes us to our social media question for the week: Will the political tide in Germany swing in favour of bringing forward coal closures? Tweet us your thoughts using the hashtag #PlattsMM.
The surge in energy costs is having impacts across markets, with intensive energy users feeling the strain. In response, French petrochemicals producer Kem One plans to apply an energy surcharge of 110 euros per metric ton on PVC sales, as well as a surcharge of 200 euros per dry metric ton on caustic soda sales, from Friday. Kem One said it was covered for only a fraction of its energy purchases, with a significant portion of both its electricity and gas bought via the spot market. We'll be keeping an eye out for other companies following suit.
Meanwhile, the European steel conference season kicks off in earnest this week, and in person. Eurometal, the European association of steel traders, stockholders and distributors, will hold an event in Lisbon from Wednesday to discuss the latest developments impacting Iberian steel consumers. The focus is expected to be on the continuing safeguards restricting steel imports into the EU, a plethora of trade cases and tariffs, high energy costs, and an intensification of the green agenda.
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Thank you for kicking off your Monday with us and have a great week ahead!