Nuclear power plants are currently entering their maintenance season of uranium refueling, similar to the cleaning of petroleum refineries to combat sulfur corrosion.
The question now is whether reduced nuclear generated electricity output will be replaced with natural gas generation?
As written in today’s issue of The Schork Report, we are skeptical. Nuclear output may have dropped but remains 8.04% above last year and 3.41% above the 2004-08 average. In fact, we are at the third highest level seen in the past decade. Traders may counter this by pointing to the falling capacity utilization rate, which currently stands at 80.7%, but on average falls to 78.98% by the end of October.
However, as the graph in today’s reportillustrates, production regressed upon capacity utilization is performing some 1.63% above historical norms i.e. we are doing more with less. This is likely a function of increased efficiency and renewed investment in the sector after the 2005 “nuclear renaissance”.
The bottom line is that we expect to see heavy injections continue in the short-and mid-term.
Stephen Schork is the Editor of The Schork Reportand has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.