Status quo: Underground caverns, mines and aquifers are brimming with molecules for this point in the season. The heating season is over, the cooling season is at least a month away and industrial and commercial demand is virtually nonexistent.
To wit, per the DOEs most recent Short Term Energy Outlook:
Total consumption of natural gas is projected to fall by nearly 2 percent in 2009, leading to lower natural gas prices. Industrial natural gas consumption is expected to decline by more than 7 percent, as industrial production declines during the current economic downturn.
Indeed, the woes in the global steel industry are well documented. Per last week’s story from the AFP:
- Demand has dwindled and steelmakers, notably the giant of them all, ArcelorMittal, are damping down surplus furnace capacity while waiting for credit to flow, construction cranes to turn and factories to roll. In just months the global industry has gone from a boom driven largely by China, emerging markets and a property extravaganza in the Middle East to a narrow line between excess capacity and the costs of waiting for recovery.
Last month here in North America, U.S. Steel idled finishing and coking operations at its Hamilton and Lake Erie, Ontario Works, affecting 1,500 employees. The company has concentrated its production at its Mon Valley (PA), Gary (IN) and Fairfield (AL) Works. Output at its Hamilton (ON), Granite City (IL) and Great Lakes (ON) Works as well as at its Keetac iron ore field has been idled or is running at reduced rates.
The company consumed the approximate equivalent of 11,000 NYMEX futures contracts (110 ×1012 Btus) in 2008. That is not an insignificant volume. And, that is just one company. Now extrapolate extant mill shut-ins, from U.S. Steel to ArcelorMittal et al, and that is a lot of Btus that are not being consumed.