Japan's hopes for 'quick ramp-up' in nuke output fades

Despite nuke restart plans.

According to Barclays Research, Japan has signalled it may restart some nuclear power stations. These outages have been a big driver of global LNG demand, but it does not expect a quick ramp-up in nuclear output given the propensity of checks and approvals, hence it continues to see robust LNG pricing globally.

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US power markets have also benefitted seasonally from the cold weather, which is in sharp contrast to Europe, where power prices have fallen significantly, most notably in Germany and the UK.

We recommend selective exposure to power markets and expect Texas and New England in the US, and the UK and Italy in Europe to bottom out.

Seaborne coal markets still do not look robust given the huge supply surge following years of investment and China’s slowdown; US coal markets remain disintermediated by natural gas. We continue to avoid coal.