Power’s plunge boosts Nordic miners, splits cental bankers

Bloomberg

The worst start to the year for Nordic electricity prices in more than a decade is delighting consumers, dividing central bankers and hurting utilities.
Nordic futures have plunged by more than half this year, outpacing declines in everything from oil to US natural gas and agricultural commodities.
The impact of that economic tailwind is likely to grow in the coming years as governments in the region push to electrify everything from cars to industry as a way of slashing greenhouse gas pollution.
The rout is caused by the warmest and wettest winter most people can remember.
While the absence of a prolonged cold snap in the Northern Hemisphere also hit markets from Asia to the US, Nordic prices fared worse than most because rain filled reservoirs that are already the region’s biggest source of electricity.
“During my 25 years in the market I’ve never seen anything like this,” said Fredrik Bodecker, a former trader and founder of Bodecker Partners AB, which advises companies on energy risk management.
“We have gone from a deficit to a massive surplus in an incredibly short period of time. Prices can go even lower.”
The slump is good news for everyone from miners, smelters and paper companies because electricity is a significant chunk of their costs.
Although they’ve already sold much of the power they need in advance at higher prices, it will hurt earnings at generators, according to analysts from Goldman Sachs Group to Bloomberg Intelligence.
And prices could fall further as the coronavirus hammers demand and sends global energy and commodity markets into free fall.
“Corona worry and falling fuel costs have already made the situation worse and sent prices beyond 2020 lower,” said Christian Holtz, an analyst at Sweco Energy AB.
Nordic electricity tend to be more volatile than most raw materials just because they are so dependent on rain and snow.
The plunge this year has made it all the way to the executive board of the Riksbank in Stockholm.