Tropical Storm Florence was moving slowly through the Carolinas Saturday, having left nearly 1 million people without power in the area.
By midafternoon Saturday utilities in the Carolinas and Virginia were reporting roughly 900,000 outages. Natural gas demand for power generation fell commensurately.
"With hundreds of thousands of power outages, damaged distribution systems and evacuations, some regions could have up to 40% declines in [power demand] for several days," said Andrew Larson from S&P Global Platts Analytics. "Generation declines alone could pull down gas demand significantly."
Florence's aggregate lost demand for the next four weeks across gasoline, diesel/distillate and kero-jet should be between 180,000-220,000 b/d, according to Platts Analytics.
Florence has been downgraded to tropical storm, but torrential rains will continue as it creeps across the Carolinas this weekend before turning north, according to the National Oceanic and Atmospheric Administration.
Here are the key takeaways across commodities:
- Fuel retailers can now sell winter-grade gasoline in North Carolina, South Carolina, Virginia and Georgia under waivers granted by the US Environmental Protection Agency ahead of Florence. The move will free up supply to meet demand from the current evacuation.
- Markets were closed Saturday. NYMEX RBOB gasoline and ULSD futures fell for the second day Friday as Florence weakened, reducing the risk of a supply disruption to the Northeast. Both contracts ended the week barely changed, as the rally from Tuesday and Wednesday reversed. The New York-delivered NYMEX RBOB contract settled at $1.9702/gal Friday, down 6.46 cents since Wednesday, while the New York-delivered ULSD contract settled at 2.2092/gal, down 4.85 cents from Wednesday.
- The US Atlantic Coast is well supplied with gasoline, but diesel stocks are tight in comparison. USAC gasoline stocks of 66.8 million barrels the week ended September 7 were 14% above the five-year average, according to the US Energy Information Administration. Diesel stocks on the USAC of 41.7 million barrels were 6% below the average.
- No US offshore or onshore oil production facilities or refineries were in the path of Florence.
- The Northeast is heavily dependent on the Colonial and Plantation pipelines for refined products supplies, both of which run through the Carolinas. Both pipelines were operating normally Saturday.
- Several regional ports were closed or limited to traffic Saturday. The port of Wilmington was closed, while Charleston was only open for outbound traffic, according to the US Coast Guard. The port of Norfolk, Virginia, a key bunkering port, was open Saturday.
- Sample demand across North Carolina and South Carolina fell to 1.5 Bcf/d Saturday, a day-on-day decrease of 350 MMcf/d and a decrease of 800 MMcf/d from the prior 30-day average, according to Platts Analytics.
- Transco deliveries to Duke Energy Carolinas power plants fell 400 MMcf/d over the past two days.
- As gas demand fell, Transcontinental Gas Pipeline Friday declared an operational flow order with penalties for its Zones 4-6. Columbia Gas Transmission declared a "critical day" for gas storage injections Friday, with penalties for exceeding maximum daily quantities.
- At Transco Zone 5 delivered gas prices were down about 10 cents to $2.83/MMBtu Friday, reflecting the sharp decline in demand in North Carolina related to power outages.
- The drop in prices at Transco Zone 5 then rippled up the pipeline, depressing points along the way.
- Significant decreases were seen at Zones 4 and 3 Friday, sending the locations to 30-day lows, with the former trading at $2.78/MMBtu, down 9 cents, and the latter down 8 cents to $2.775/MMBtu.
- Farther away Zone 2 shed 8.5 cents to $2.77/MMBtu and Zone 1 dropped 5 cents to $2.795/MMBtu.
- Dominion, which is building the 1.5 Bcf/d Atlantic Coast pipeline to carry gas from the Appalachian Basin to North Carolina, has “reinforced environmental controls and stabilization measures at our worksites, and we'll continue monitoring them closely throughout the storm,” according to spokesman Aaron Ruby.
- The developers of the 300-mile Mountain Valley Pipeline “have halted the advancement of construction in Virginia until the storm passes and are focused on stabilization of the right-of-way, and maintenance and enhancement of erosion controls,” according to a Mountain Valley Pipeline statement.
- Feedgas deliveries to Dominion's Cove Point have fallen to just over 0.3 Bcf/d during the last four days as of Friday, down about 60% from the prior month-to-date flows.
- Kinder Morgan ceased construction activities at its $2 billion liquefaction plant project at the Elba Island LNG Terminal in Georgia in advance of the arrival of Florence. The Elba Island LNG Terminal itself will remain in operation, the company said.
- Hourly peak demand across the Carolinas was set to reach 24.2 GW for the hour ending 6 pm EDT Saturday, 34% below last Saturday's peak, according to the Energy Information Administration.
- The hurricane has wiped out more than half of Duke Energy's Progress East load. Actual peak demand around 1 pm Saturday came in around 4.5 GW, less than half the area's actual load of 10.3 GW at the same time last Saturday.
- Despite the demand destruction, power prices in Southeast have seen some upticks in recent days, potentially because of some generators going offline and pockets of warmer weather. Into Southern next-day on-peak was offered Friday in the low $50s/MWh for Monday delivery on Intercontinental Exchange, more than $10 above prices for Friday delivery. Into Georgia Transmission weekend on-peak package for Saturday-Sunday was offered in the high $40s/MWh, with the off-peak package for Saturday-Sunday-Monday delivery traded in low $20s/MWh, $3 lower than Friday off-peak packages.
- On Saturday afternoon, PJM's Dominion Hub real-time locational marginal prices averaged around $63/MWh, up from Friday's day-ahead on-peak LMP of $37.21/MWh for delivery Saturday.
- Looking further up the coast as the storm heads north, power prices for later in the week were firm. The storm is forecast to reach the PJM Interconnection region Monday or Tuesday and Northeast by Wednesday.
- In the Mid-Atlantic region, PJM West Hub on-peak balance-of-the-week traded from $42/MWh to $43.50/MWh on ICE Friday, a slight premium to the on-peak day-ahead price for Monday of around $41.50/MWh. PJM peakload was forecast to range from 109,200 MW to 119,775 MW during the week, as much as 20% above the seven-year September peakload average, as temperatures during the week are expected to range from the upper 70s to upper 80s, as much as 10 degrees above seasonal norms.
- As of about 2 pm EDT Saturday, utilities reported the following outage numbers:
o Duke Energy: 486,336
o North Carolina Electric Cooperatives: 309,714
o Santee Cooper: 32,541
o Electric Cooperatives of South Carolina: 43,003
o Horry (South Carolina) Electric Cooperative: 25,224
o South Carolina Electric & Gas: 1,346
o Dominion Energy: 920
- Duke Energy's two-unit 1,978 MW Brunswick nuclear power plant just south of Wilmington, North Carolina, was shut Thursday night as the storm approached, as required by plant procedures, the company said. Brunswick has not sustained any damage.
- Another Duke nuclear unit, the 820-MW Robinson-2, was in the path of the storm but remained operating, plant spokesman Patrick Flynn said Friday.
- North Carolina and South Carolina have a heavy concentration of nuclear reactors, with 12 of the country's 99 nuclear units. In addition, four units are in Virginia and five in coastal Delaware and Maryland.
- Domestic pricing for purified terephthalic acid was assessed stable for the week at 52.87 cents/lb ($1,165.57/mt) delivered basis Friday, with no disruptions at the two production facilities located in the Carolinas.
- DAK America's 600,000 mt/year PET plant and fibers operations at Moncks Corner, in the Charleston area, remained shut, the company confirmed.
- The Port of Charleston continues to allow outbound traffic only but aims to resume normal vessel activity Sunday. Container gates will reopen Monday morning for truck activity.
- Charleston is the fourth-largest export point for polyethylene resin behind the districts of Houston and Galveston, Los Angeles and New Orleans.
- The US Coast Guard and the Port of Virginia reopened the main shipping channel and all terminals at 7 am EDT Saturday, after Hurricane Florence resulted in little impact at the country's biggest coal-shipping artery.
- Two coal vessels were scheduled to move at 11 am EDT Saturday, a Port of Virginia spokeswoman told Platts; the channel had been closed since Wednesday, adding to existing metallurgical coal market tightness and pushing US coking coal prices higher last week.
- The S&P Global Platts assessment of US East Coast low-volatile hard coking coal rose to $193/metric ton FOB by Friday, up $16/mt from September 7.
- Platts' US high-vol A index increased to $202/mt FOB USEC. The Platts US high-vol B assessment climbed to $170/mt FOB USEC.
- There was no storm-related impact on steel pricing, notwithstanding the fact that nine primary steel mills were in the path of Florence -- totaling nearly 10 million st/year of raw steelmaking capacity, or approximately 8% of total steel capacity in the US.
- The Platts' benchmark price assessment for steel plate – an already tight market -- did close higher Friday at $986.75/st delivered to the Midwest, up $3/st from Thursday and threatening the August high for the year of $988/st.
- Nucor Steel Hertford in North Carolina is one of the country's largest steel plate mills and operations were suspended last week.
- The Platts benchmark price of steel hot-rolled coil, a product made at Nucor Steel Berkeley in Huger, South Carolina, declined to $855.75/st by Friday, down from $870.50/st September 7.
- Commercial Metals Company shut down its recycling yard in Florence, South Carolina. The steelmaker said Friday it was still monitoring the storm and “currently proceeding with normal operations,” at its 800,000 short tons/year steel rebar operation in Columbia, South Carolina, which is more inland.
- Century's wholly owned Mt. Holly aluminum smelter in South Carolina with a production capacity of about 231,000 mt/year (about 8% of total US primary aluminum capacity) is operating on an as-needed basis.
- Little row crop impact is expected, with the exception of northern cotton acres.
- Soybean crop loss could reach 30% in the Carolinas and Virginia, according to sources, but 30 million bushels is not enough to have significant impact to the US as a whole.
- Wet conditions could delay the soybean harvest, but the crop still has 30-40 days to dry out post-Florence.
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