German power: €50.46/MWh, up 1.86%
Coal: €98.03/t, up 0.71%
Natural gas: GB41.35p/therm, up 2.64%
EUAs for December 2010 delivery: €14.02/t, up 1.89%
CERs for December 2010 delivery: €11.82/t, up 1.55%
Brent crude oil futures for front-month 2010 delivery: US$77.16/bbl, down 0.6% as of GMT 09:00, July 30
WTI crude oil futures for front-month 2010 delivery: US$77.90/bbl, down 0.6%, as of GMT 09:00, July 30

Latest buzz

NYMEX crude for September delivery rose by 1.8% to settle at US$78.36/bbl yesterday, after hitting an intraday high of US$78.89/bbl, while ICE Brent crude climbed US$1.53 to finish the day at US$77.59/bbl. In both cases, the main driver was the strength of the Euro, which reached an 11-week high at over US$1.31 in early trading, on the back of more positive economic data from the Eurozone and a less than impressive US government report on unemployment.

Trading today will be overshadowed by the release of 2Q10 real GDP data for the US, which according to a Dow Jones survey, is estimated at 2.5%. Should it be any lower then crude is expected to come under significant pressure. Early Asian trading has already pushed both contracts lower due to reports that the Japanese unemployment rate has risen, while deflation continues and industrial output has dropped. A Bloomberg news survey has suggested that OPEC oil output has risen this month by 0.3% to average 29.4mbpd, 1.98mbpd above the cartel’s target. The amount of crude held in floating storage on board VLCCs has dropped by 73% over the course of this year to 11mbbl, as of July 29, according to ICAP Shipping International Ltd, as the shift towards backwardation has eliminated much of the incentive to hold oil in inventory. ExxonMobil, Royal Dutch Shell and oil service firm National Oilwell Varco have all reported strong earnings, despite the latter also reporting a 2.3% decline in revenue.

Some positive news has come from Germany, where unemployment has fallen for a 13^th successive month, to 3.21m, the lowest level seen since November 2008, according to the Federal Labor Agency.

According to the EIA, US natural gas production in May was essentially unchanged from the levels reported in April, totalling 64.92bnft³pd. Front month NYMEX natural gas traded yesterday in the US$4.79/mBtu range, before settling at US$4.83/mBtu (up 2.3%), thanks to the news that gas in storage rose by only 28bnft³ to 2919bnft³, down 3.1% on year, but up 8.9% above the five year average. The injection into storage was significantly below historical injections for the week.

Anglo American has reported that its thermal coal production for the first six months in South Africa for export had fallen by 6% as a result of heavy rain and geological issues. In contrast output at the Cerrejón mine in Colombia was unchanged from 2009 and its Australian thermal coal production has risen by 5%.

NTPC Ltd, the state-owned Indian power company is looking to import a record 14.5Mt of thermal coal for the year ending March 2012. The company will be importing the fuel directly for the first time, as opposed to previously obtaining imported coal through state-owned companies such as MMTC Ltd and the State Trading Corp of India. NTPC currently operates 15 coal-fired power plants and is planning to double its capacity to 75GW by 2017.

EUAs have been pushed up to above €14/t, on the back of a uniformly positive energy complex and a rise in the EU economic sentiment indicators to its highest level for two years. The index has been boosted from positive results from BASF, Siemens and Vattenfall. CERs also advanced but less than EUAs, causing the DEC10 CER-EUA spread to finish the day at -€2.20 and the DEC12 spread to end at -€3.27.

German power: €49.54/MWh, up 0.47%
Coal: €97.19/t, down 0.11%
Natural gas: GB40.28p/therm, up 1.47%
EUAs for December 2010 delivery: €13.76/t, up 0.29%
CERs for December 2010 delivery: €11.64/t, up 0.17%
Brent crude oil futures for front-month 2010 delivery: US$76.30/bbl, up 0.3% as of GMT 09:15, July 29
WTI crude oil futures for front-month 2010 delivery: US$77.24/bbl, up 0.4%, as of GMT 09:15, July 29

Latest buzz

Oil prices have rebounded after yesterday’s precipitous decline, sparked by a surprise 7.3mbbl build in US crude inventories for the previous week, reported by the EIA. This was partly driven by a 1.18mbpd increase in imports to 11.2mbpd, the highest level seen since the week ending August 25, 2006.

The news caused NYMEX crude for September delivery to fall to a one week low, settling down US¢51 to US$76.99/bbl. Today has seen a return to above US$77/bbl, as a result of a fall in the value in the dollar against the Euro, which is enjoying positive momentum as a result of a strong performance from its banking sector in stress tests reported on July 21. There remain concerns regarding the future outlook for oil demand, given that the Federal Reserve in its latest Beige Book Report said that US economic activity had risen only modestly in June. Further concerns were raised when an unexpected 1% drop in US durable goods orders and was reported on July 28. The Conference Board also reported that US consumer confidence has fallen to its lowest level in five months in July.

NYMEX natural gas for August delivery rose by 2.91% to settle at US$4.811/mBtu, while gas for September delivery rose 3.36% to US4.802/mBtu. The main impetus behind the rise in prices remains the high temperatures across most of the major gas-consuming regions, but support also came from traders buying back previously sold contracts in order to cover their positions ahead of the August contract expiration. In addition, the fact that the Atlantic storm season is expected to last through to September, is making it difficult to justify a sale off, despite its lack of impact to date.

Prompt coal cargo prices for European delivery and Richards Bay FOB dropped by around US¢50/t yesterday, with the latter trading at US$89.50/t, despite the news that heavy seasonal rains have significantly impacted on Indonesian coal output in South Kalimantan and affected ship loadings. If the situation continues for another week, it could potentially lead to delays or producers declaring force majeure. Some sellers of prompt South African cargoes are holding back to see how this state of affairs develops, while ample supplies at Australian ports are thought to be one of the main reasons why prices have yet to rise.

Over in China, the coal industry has been doing remarkably well. According to the National Development and Reform Commission, the sector generated a total profit of CNY122.5bn in the first five months of this year, up 80.9% YoY. Domestic coal production rose to 1.57bnt in the first half of 2010, up 20.1%, while imports rose to 81Mt over the same period up 70.6% YoY. In contrast, exports amounted to just 10Mt, down 13% YoY. Coal prices have risen since they hit a low of CNY680/t in late March, to around CNY765/t and the commission is expecting prices to be relatively stable in the second half of this year, partly due to initiatives designed to reduce pollution and emissions.

European carbon prices have risen, thanks to a mildly supportive energy complex with oil prices and the 2011 German baseload contract being the main factors. CERs recorded smaller gains, causing the DEC10 CER-EUA spread to widen to -€2.12/t and the DEC12 spread widening to -€3.20/t. Interestingly, four analysts polled by the Reuters news agency viewed current EUA prices as a reason to buy, given expectations of an European economic recovery and a tighter market for emissions allowances in Phase III of the EU ETS which begins in 2013.

German power: €49.31/MWh, down 0.06%
Coal: €97.34/t, down 0.15%
Natural gas: GB39.70p/therm, down 3.41%
EUAs for December 2010 delivery: €13.72/t, up 1.40%
CERs for December 2010 delivery: €11.62/t, up 0.43%
Brent crude oil futures for front-month 2010 delivery: US$76.28/bbl, up 0.2% as of GMT 08:45, July 28
WTI crude oil futures for front-month 2010 delivery: US$77.55/bbl, down 0.0%, as of GMT 08:45, July 28

Latest buzz

In stark contrast to Monday’s veritable buffet of positive economic news, oil prices were dragged down on Tuesday, thanks to a number of bearish signals. These included a 3.9 percentage point fall in the Conference Board’s Consumer Confidence to 50.4, from the 54.3 seen in June and a report from the Richmond Federal Reserve which indicated that there had been a drop in manufacturing activity. These outweighed the release of more strong company earnings data and a rise in US house prices. Adding to bearish sentiment was the news that the American Petroleum Institute has reported a surprise 3.1mbbl jump in US crude inventories for last week, compared to the 2.3mbbl draw down predicted in a Platts survey. As a consequence, US NYMEX crude settled yesterday at US$77.50/bbl, down US$1.48/bbl from the previous session.

Yesterday saw natural gas on the NYMEX rise for the second day in a row, as above average temperatures continued to boost demand for air conditioning and electricity. Natural gas for August delivery rose by 1.4% to settle at US$4.676/mBtu, while gas for September delivery rose by US¢6.3 to US$4.646. Today marks the expiry of the August contract. The National Weather Service has predicted that the hot weather across much of the US Midwest and East will remain over the August 1 to August 5 period.

Genscape has released its weekly status report on US coal inventories at power plants. Stockpiles have fallen by 1.6% and are currently down 16% on year. As a result, US power utilities have 55 days of coal burn on hand, as of July 26, two less than that seen in the previous week. Total inventories amounted to 152.5Mst, down from the 155.2Mst seen on July 19. Once again, the draw down in inventories has been attributed to the economic recovery and in the case of the weekly decline, the hot weather seen across much of the country.

Over in Europe, the carbon markets appear to have largely ignored fundamentals. Despite a slight drop in German Power and a large fall in the value of UK natural gas, DEC10 EUAs came off the lowest level for four months (€13.34/t), to settle at €13.72/t, up 1.40% on the previous session. Some support came from sentiment that the contract had been oversold as well as the news that the UK government will be putting pressure on the European Commission to increase the amount of auctioning taking place under the EU ETS. CER prices failed to continue their strong performance against EUAs, partly as a result of the shelving of plans to introduce cap and trade at the Federal level in the US. The DEC10 CER-EUA spread widened to -€2.10.

A total of 468 facilities with a combined generating capacity of 10.71GW were closed by July 15, two months ahead of schedule. As a result, the government has forced the closure of 70.77GW of small scale coal-fired capacity during the 11^th Five Year Plan period (2006-2010). The plants would have used 81Mta of coal, while emitting 164Mta of CO₂ and 1.4Mta of SO₂ if they had remained in operation. The program of closures is part of a national goal to reduce the carbon intensity of the Chinese economy per unit of GDP by 40-45 per cent by 2020 from the 2005 level.

Chinese coal consumption at power stations has fallen over the course of this month, due to high inventory levels and good supplies. Calculations based on industry data indicate that the country’s average daily coal burn stood at 3.39Mt in the first week of July, but dropped by 8% to 3.14Mt from July 8-20. Daily coal consumption fell most in the northwest, dropping by 16%, while the central and northern regions recorded declines of 12% and 10%, respectively.

Also putting pressure on the market are expectations that power demand growth will slow in the second of the year, The China Electricity Council has predicted that it could slow to around 5%, as result of curbs on energy intensive and polluting industries. The council is expecting total electricity consumption to rise by 12% to 4.1tnkWh his year. In comparison, electricity use rose by 22% in the first six months of this year on the back of higher industrial output.

Despite strong demand, power utilities are struggling due to the freeze on electricity prices introduced as an anti-inflationary measure by the central authorities. According to the council, 43.4 per cent of thermal power producers have reported losses in the past five months, up 3.5 percentage points on year.

German power: €49.91/MWh, down 1.87 per cent
Coal: €97.72/t, down 1.14 per cent
Natural gas: GB41.75p/therm, down 7.02 per cent
EUAs for December 2010 delivery: €14.23/t, down 2.27 per cent
CERs for December 2010 delivery: €12.07/t, down 2.19 per cent
Brent crude oil futures for front-month 2010 delivery: US$76.69/bbl, up 1.5 per cent as of GMT 10:00, July 21
WTI crude oil futures for front-month 2010 delivery: US$78.08/bbl, up 1.8  per cent, as of GMT 10:00, July 21

Latest buzz

NYMEX crude for September delivery rose US¢68 to settle on Tuesday at US$77.58/bbl, on the back of a 0.7 per cent rise in the Dow Jones industrial average and a 1.1 per cent increase in the S&P 500 on strong 2Q10 earnings. This effectively dissipated the bearish sentiment created by a report from the Commerce Department which included the news that new housing starts fell by five per cent in June to 549,000.

A report released by the American Petroleum Institute later that day indicated that US crude inventories fell by 241,000bbl in the previous week, compared to the 1.6mbbl expected by analysts surveyed by Platts. The EIA is due to release its more authoritative “This Week in Petroleum” report later today.

Additional impetus is coming from a weather system over Puerto Rico and the Dominican Republic, which the National Hurricane Center has warned, has a 60 per cent chance of developing into the second named tropical cyclone of the Atlantic Hurricane season.

Genscape has reported that US power plant coal inventories fell by 2.1 per cent this week. As of Monday, power utilities had 155.2Mst of coal on hand, equivalent to 57 days of coal burn, compared to the 158.5Mst seen on July 12 and down from the 180.1Mst seen in the same week last year.

China Coal Energy’s crude coal production rose by 29.6 per cent YoY in the first half of this year to 62.26Mt, while its exports and imports increased by 24.1 per cent and 154.8 per cent, to 720,000t and 1.07Mt respectively. Crude coal output in June was up 5.4 per cent YoY at 10.3Mt.

Over in Europe, “The European Commission has approved a proposal for a Council Regulation on State aid to facilitate the closure of loss-making hard coal mines in the EU by 15 October 2014,” according to a statement made by the EU executive. The current funding regime, which allows state aid for the coal industry is set to expire this year.

EUAs experienced a steady decline over the course of yesterday’s trading, due to the marked drop-off in German power prices and UK natural gas. Although the latter recorded a seven per cent fall in the value of its front-month contract, it was the nearly two per cent decline in 2011 German power prices that caught traders attention, given fears that it could be partly due to reduced demand. The DEC10 CER-EUA spread stayed in a narrow range and eventually finished the day at -€2.16. The DEC12 CER-EUA spread also tightened, finishing at -€3.31.

BHEL received orders for 16,489MW of power plant equipment in FY2009-10, of which 14,689MW come from independent power producers (IPPs). The company is currently looking to expand its capacity to 20GWpa of equipment production, from the current 15GWpa.

Power plants are increasingly operating in a more competitive climate and in a world short of mineral resources, coal continues to be the raw materials of choice and correspondingly by-products from coal combustion are increasing. Stricter regulations and a heavier legislative burden coupled with increasing environmental awareness have made the operation of power plants more complicated and expensive. Resultant higher transport and disposal costs associated with waste and combustion by-products mean that the power industry must look for solutions to minimise the environmental impact. Reutilisation of bottom ash from coal combustion is already showing positive results with its use in structural embankments and drainage systems. When mixed with fly ash it may also be used in the cement industry. A new dry bottom ash handling system continues to burn the bottom ash during the extraction and cooling phase – passing ambient air, instead of water, over the ash. Known as DRYCON™, the system not only minimises emissions and non-recyclable waste products but also delivers increased boiler efficiency, due to the improved burning of the ash.

Dry vs wet
Traditionally bottom ash has been handled in a wet condition via established technologies such as impounded hoppers or submerged scraper conveyors. The use of water as opposed to air as a cooling agent can incur additional costs. Factors such as water treatment, corrosion damages, higher disposal costs and environmental problems as well as the higher costs to maintain must all be considered.

Using a dry system means that no water is required in the process therefore no water treatment is necessary. Reduced emissions and returning heat energy to the boiler resulting in lower coal usage and so with lower costs for emission trading are also highly beneficial to plant operators. The table below shows the main factors which compare between the two methods of conveying:

Cost scenario – DRYCON™ vs SSC

The following is an economic study of the relative costs of a DRYCON™ bottom ash system against the more traditional Submerged Scraper Conveyor (SSC) technology. The study is based on a typical European base load pulverised coal fired power plant of 800MW operating with imported coal. The economic factors assumed for the study assume depreciation over 10 years and the interest on loan capital of 12 per cent.

Looking at the investment costs, it can been seen that although the DRYCON™ is slightly more expensive than the SSC on a unit basis and the cost of associated crushing equipment is similar, these are offset by simpler transport and storage equipment and the lack of requirement of water treatment equipment such as pumps, filters, heat exchangers etc.

Considering the consumptions on an annual basis, it can be seen that due to the DRYCON™ roller design, the friction losses are significantly reduced and therefore have a positive effect on energy consumption and resultant wear. In addition, the SSC requires the provision of cooling water. At the associated costs indicated, it can be seen that the annual operating costs of the DRYCON™ are approximately 47 per cent of those of the SSC. As discussed earlier, the DRYCON™ captures waste energy from the incomplete combustion of the bottom ash and introduces it into the boiler as pre –heated air at approximately 450 degrees C. This results in an overall increase in boiler efficiency of between 0.15 and 0.5 per cent.

The bottom ash resulting from the DRYCON™ is a sellable product as it has good properties for the construction industry because it is low in carbon and it is dry and easily handled. In comparison the wet bottom ash from the SSC is generally disposed of and has the potential to impact the environment through water consumption and contamination.

For the concluding calculations, an increase of boiler efficiency of 0.15 per cent is assumed and no provision has been made for income from the sale of dry DRYCON™ bottom ash or costs for the disposal of wet SSC ash.

For the relative rate on investment the following calculation has been used.

Relative ROI = ((Gain from in investment from DRYCON™ over SSC) – (Cost difference between DRYCON™ and SSC))/(Cost difference between DRYCON™ and SSC)

In Scenario 1, it is assumed that the increase in efficiency of 0.15 per cent is used to generate an additional 9461 MW per annum (0.15% x 800MW x 7884hrs).

((9,460,800 kWh x 0.10 €/kwh) – ((€1,100,000 + €47,279) – (€852,500 + €100,065))) / ((€1,100,000 + €47,279) – (€852,500 + €100,065))
= 3.86 per year or 3.11 months

In Scenario 2, it is assumed that the same amount of power is produced but the increase in efficiency of 0.15 per cent is used to save 3514t of coal (0.15% x 297.2tph x 7884hrs).

((3,514 tonnes x 100 €/tonne) – ((€ 1,100,000 + €47,279) – (€852,500 + €100,065))) /
((€ 1,100,000 + € 47,279) – (€ 852,500 + € 100,065))
= 0.80 per year or 14.91 months

German power: €51.26/MWh, up 0.37 per cent
Coal: €98.80/t, up 0.09 per cent
Natural gas: GB45.17p/therm, down 3.01 per cent
EUAs for December 2010 delivery: €14.26/t, up 2.22 per cent
CERs for December 2010 delivery: €12.09/t, up 2.02 per cent
Brent crude oil futures for front-month 2010 delivery: US$75.27/bbl, down 0.5 per cent as of GMT 10:00, July 19
WTI crude oil futures for front-month 2010 delivery: US$75.96/bbl, down 0.4 per cent, as of GMT 10:00, July 19

Latest buzz

Oil prices dipped slightly on July 16, giving up almost one per cent as a result of a poor performance from US equities, triggered by a bearish consumer confidence report and disappointing 2Q10 results from Bank of America and General Electric. NYMEX crude finished Friday at US$76.01/bbl, down 0.1 per cent from the previous week and in marked contrast to the 5.5 per cent gain recorded in the previous week. The University of Michigan’s preliminary index of consumer sentiment fell to 66.6 from 76 in June.

As of writing, US crude has slipped below US$76/bbl, suggesting that oil traders are continuing to factor in the 2.5 per cent drop in the value of the Dow Jones Index and that the underlying economic pessimism is starting to erode the support generated by the strong crude inventory reports issued by the EIA over the past few weeks.

Despite the current price environment, Barclays Capital is still holding to its forecast of NYMEX crude averaging US$84/bbl in 3Q10, and US$87/bbl in 4Q10, saying in a note to clients that these prediction are “befitting the current and future oil market fundamentals.”

According to an Iranian official, Iran is considering seeking payment for its oil exports to Europe in UAE dirhams instead of euros to avoid the impact of possible tighter trading sanctions. Such a move would be intensely uncomfortable for the UAE, which is a major US ally, despite the fact that Iran is one of its largest trading partners. The news has been greeted with disbelief from some analysts, given that the currency is pegged to the US dollar and is not traded in the same way in the international markets. However, it is thought that the proposal might be a response to current efforts by the UAE to tighten trade restrictions with Iran. If Iran started to hold more dirhams, it could potentially alter the balance of power between the two countries.

BP has suffered a fresh set-back given news that oil is seeping from a location some distance from its capped Deepwater Horizon well. BP is looking to convert the cap to allow a riser to be connected to the well, which would allow oil to be collected by ships, which could mean another three days of uncontrolled release into the Gulf of Mexico, according to BP’s chief operating officer Doug Suttles, during an early morning news conference on Sunday.

NYMEX natural gas drifted down US¢7 to close at US$4.52/mBtu on Friday, partly as a result of profit taking following Thursday’s seven per cent surge, but also as result of a stronger US dollar and expectations of higher domestic production, given that data from Baker Hughes Inc indicated that the natural gas rig count has risen to its highest level in over a year.

According to Genscape, US coal consumption rose by three per cent over the course of the week ended July 15, and is up 17 per cent on year. In the east of the country, use was up two per cent from the previous week and 21 per cent on year, while the west which has fewer coal-fired power plants saw coal consumption rise by nine per cent from the previous week and up 12 per cent on year. The rise in coal usage is partly attributed to an unusually high number of nuclear power plant outages for maintenance, a large proportion of which are unplanned.

EUA prices managed to mount a recovery on Friday, after a slow start to trading, due to a rise in the value of 2011 German power contracts, which offset the impact of weaker natural gas prices. Bullish sentiment drove the 2010 contract to touch €14.40/t in the last hour of trading, but were unable to find enough support, causing the contract to finish the day lower at €14.26/t. CER prices performed less strongly, possibly due to the current outlook for US climate legislation. Senator Harry Reid is expected to reveal an energy and climate bill this week, but it is not known as to whether it will feature cap and trade. Meanwhile, Senators John Kerry and Joe Lieberman are working on a smaller version of their earlier bill, which will focus exclusively on emissions from utilities. The DEC10 CER-EUA spread finished the day at -€2.17, while the DEC12 spread was wider at -€3.29.

German power: €51.07/MWh, up 0.16 per cent
Coal: €98.71/t, up 0.43 per cent
Natural gas: GB46.57p/therm, down 0.92 per cent
EUAs for December 2010 delivery: €13.95/t, down 0.43 per cent
CERs for December 2010 delivery: €11.86/t, down 0.75 per cent
Brent crude oil futures for front-month 2010 delivery: US$76.08/bbl, up 0.43 per cent as of GMT 10:15, July 16
WTI crude oil futures for front-month 2010 delivery: US$76.71/bbl, up 0.6 per cent, as of GMT 10:15, July 16

Latest buzz

NYMEX crude fell yesterday as a result of gloomy economic data from the US and China, giving up US¢42 to settle at US$76.62/bbl, while Brent crude dropped by US¢58 to finish at US$76.19 on the ICE futures exchange. The US Federal Reserve reported that industrial production rose by 0.1 per cent last month, while factory activity in New York and Philadelphia slowed. This sharply contrasts with the 1.3 per cent increase seen in May and factors in a 0.4 per cent decline in manufacturing output, ending three months of back-to-back gains. The impact would have been greater if it were not for a report that indicated that US new jobless claims have fallen to a two-year low and the fact that the news triggered a slide in the value of the US dollar.

As of writing, the oil markets seemed to be recovering from yesterday’s losses, possibly as a result of some traders taking the opportunity to pick up oil at a discount.

According to UK consultancy Oil Movements, seaborne OPEC oil exports (excluding Angola and Ecuador), will rise by 20,000bpd to 23.560mbpd in the four weeks to July 31. The cartel has announced that it is holding its forecast for world oil demand growth in 2010 constant at 950,000bpd, meaning that it expects to the world to consume an average of 85.36mbpd over the course of this year. OPEC is also predicting that oil demand will rise by 1.05mbpd in 2011 to 86.41mbpd and that non-OPEC supply will grow in 2011 by 0.3mbpd to 52.2mbpd, thanks to gains by Brazil, Canada, Azerbaijan, Colombia and Kazakhstan offsetting declines from Britain, Norway and Mexico. Unsurprisingly, OPEC expects China to lead the world in oil demand growth, with Chinese oil consumption predicted to rise by 0.4mbpd in 2011.

US Natural gas prices rose yesterday following a report from the EIA, indicating that 78bnft³ of natural gas was injected into storage over the past week, towards the low side of predictions by market participants. As a result, inventories are down 1.1 per cent on year, but 10.7 per cent above the five-year average. Analysts polled by Platts had been expecting an increase of between 78 and 82bnft³. NYMEX natural gas for August delivery rose by US¢28 to US$4.586/1000ft³, to the highest settlement price seen for two weeks. The heatwave that has hit much of the country has pushed electricity generation up by 8.7 per cent this week on year, according to the Edison Electric Institute.

Yesterday saw little action on the coal markets with few trades reported. Coal prices for cargoes for delivery to Europe and FOB Richards Bay dropped by around US¢50/t. According to traders, demand from China and India for spot cargoes is good and is underpinning current prices. Indonesia’s rainy season is limiting its participation on the market and causing Chinese buyers to look to South Africa instead. Despite a noticeable lack of prompt demand, European DES ARA prices are still holding at around US$90/t, partly as a result of low freight rates.

The carbon markets also suffered from a lack of direction on July 15, with EUAs marginally edging down to just below €14/t. The energy complex gave conflicting signals, with a slight rise in 2011 German power prices largely cancelled out by the combination of cheaper natural gas and more expensive coal, along with the decline in Brent crude. CERs saw sharper declines and as a result, the DEC10 CER-EUA spread widening to -€2.09, despite the news that Kansai Electric power in Japan is looking to buy 500,000 CERs from Vietnamese hydropower projects by the end of 2012. Some negative sentiment may have been sparked by the fact that two European members of parliament have called for a ban on the use of CERs generated from HFC23 destruction projects.

KEPCO and its units are looking to other countries to counter a slow down in domestic power sales in its traditional market. Sahara India Power has already signed an agreement with the state government of Orissa for the construction of the plant at Turla in Balangir district. The project will take place in two phases. The first of which will have a capacity of 660MW and is expected to be commissioned in February 2013, with the second phase following six to eight months later.