Market round-up: Power PLFs trend lower in June
In other news, oil sceptics exit as market dispels gloom to flirt with $50; China iron ore, steel soar on environmental inspections, strong demand
Sluggish demand and the onset of the monsoon weighed on the plant load factors (PLFs) in the power sector during June. When compared to a year back, the overall PLF declined by 6.4 percentage points to 48.9%, excluding renewables. PLF fell sharply across coal and nuclear plants though it rose in the hydro segment. Emkay Global Financial Services Ltd explained in a recent report that the fall in PLF was partly because 23.4% of the current installed capacity in power has been added in the last three years at a time when demand expanded by a paltry 2.8% compound annual growth rate.
Oil sceptics exit as market dispels gloom to flirt with $50
As pessimism over oil dissipates and investors flirt with $50 a barrel again, short-sellers are getting out of the way.
Hedge funds are the most upbeat about West Texas Intermediate (WTI) crude in three months after bets on declining prices shrank. Meanwhile, signs that the shale boom is slowing and the market is moving closer to balance set the mood for futures to jump 8.6% last week.
Hints of relief came from everywhere. Saudi Arabia, Kuwait and the United Arab Emirates pledged to ship less crude. Halliburton Co. said shale explorers are “tapping the brakes,” and producers from ConocoPhillips to Statoil ASA slashed spending plans. US oil stockpiles fell to the lowest since January.
Hedge funds increased their WTI net-long position—the difference between bets on a price increase and wagers on a drop—by 11% to 238,501 futures and options over the week ended 25 July, data from the US Commodity Futures Trading Commission showed. Shorts slipped by 22% and stood at less than half their level at the end of June. Longs fell 0.2%. Bloomberg
China iron ore, steel soar on environmental inspections, strong demand
China’s iron ore futures surged nearly 8% on Monday, hitting their trade limit-up with their best daily performance since November 2016, underscoring concerns over tight supply amid environmental inspections and strong restocking demand.
At the same time, steel mills are continuing to show increased activity. Data from the China Federation of Logistics & Purchasing showed on Monday that the purchasing managers’ index (PMI) for the steel sector rose to 54.9 in July, the fastest pace since April 2016.
The most-traded iron ore contract on the Dalian Commodity Exchange surged nearly 8% to 570.5 yuan ($84.82) a tonne, going trade limit-up and hitting its highest mark since 6 April. The most-active steel rebar contract on the Shanghai Futures Exchange gained 4.7% to 3,733 yuan a tonne, hitting a top of 3,740 yuan, highest since 12 December 2013. Reuters
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