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Majority of new capacity over next three years expected to come from China and India

Global nuclear power generation is set to reach an all-time high next year, according to the latest forecasts from the International Energy Agency, marking a resurgence for the technology and boost for efforts to cut carbon dioxide emissions.  

Output from nuclear power plants is expected to rise by about 3 per cent both this year and next to 2,915TWh, overtaking the previous peak of 2,809TWh in 2021, and by a further 1.5 per cent in 2026, the IEA said.

Growth will be driven by new reactors in China and India as well as the return of plants in France that were shut down last year for maintenance.

More nuclear power as well as the rapid growth of renewables such as wind and solar are helping to push fossil fuels out of the electricity system, according to a report on global electricity markets published by the IEA on Wednesday. 

It believes that growth in electricity demand over the next few years will now be met by low-emission sources, with the share of global supply delivered by fossil fuel generators set to fall to a record low of 54 per cent in 2026. 

IEA executive director Fatih Birol noted the power sector currently “produces more carbon dioxide emissions than any other [sector] in the world economy” so the trends were encouraging. 

“This is largely thanks to the huge momentum behind renewables, with ever cheaper solar leading the way, and support from the important comeback of nuclear power, whose generation is set to reach a historic high by 2025,” he said. “While more progress is needed, and fast, these are very promising trends.”

It marks a revival for nuclear power after the disaster in Japan in 2011, when reactors at the Fukushima Daiichi plant were damaged by a tsunami, prompting Germany and Japan to pull back from the sector.

The industry has been helped by the global push to cut carbon dioxide emissions, as well as widespread concerns about energy security in the wake of Russia’s full-scale invasion of Ukraine in February 2022, which disrupted gas markets. 

At the UN’s COP28 climate summit in Dubai last year, more than 20 countries, including the US, the UK and France, agreed to try to triple global nuclear power capacity by 2050. 

However, the growth until 2026 is set to be concentrated in China and India, which are expected to account for more than half of the 29 gigawatts of expected new capacity, the IEA said. 

The rapid growth of the technology in China means it now accounts for 16 per cent of global nuclear generation, up from 5 per cent in 2014, while the country is aiming to increase its installed capacity from about 56GW to 70GW by 2025, according to the report.

Meanwhile, both China’s and Russia’s influence in the sector is growing, the IEA added, with the two countries providing the technology for 70 per cent of the reactors under construction. 

Projects in China face fewer delays than those in Europe and the US, the IEA noted, warning that construction delays for large nuclear projects are a “major global concern”. 

On Tuesday, France’s state-owned nuclear developer EDF announced further delays to the Hinkley Point C nuclear power plant it is building in Somerset, England.

The 3.2GW project is now not due to start producing electricity until 2029 at the earliest, compared with an initial start date of 2025, and could cost £35bn, nearly twice its original budget.

The UK government and EDF are looking to attract external investors to build a second new plant in Britain, the planned £20bn Sizewell C project in Suffolk.

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SHANGHAI/BEIJING (Reuters) -China's securities regulators have asked some hedge fund managers to restrict short selling in its stock index futures market, two sources said, as authorities seek to stabilise sinking stocks.

The blue chip CSI300 Index plunged to near five-year lows this week, prompting fresh vows by the government to steady capital markets.

A hedge fund manager said he received calls from China's financial futures exchange, cautioning against reckless short selling, especially "naked" short selling that is not conducted for hedging purposes.

Another hedge fund source said the exchange had informally asked his firm recently not to short sell for speculative purposes.

"Shorting is profitable in a falling market," the source said. "But if you get calls from the exchange, you get the message that you should no longer short sell to make a profit."

The sources spoke on condition of anonymity.

The China Financial Futures Exchange (CFFEX) did not reply to a Reuters request for comment. Nor did the China Securities Regulatory Commission (CSRC), which oversees the exchange.

China's stock market tumbled 13% in 2023 and has extended its slide in the new year amid relentless foreign selling, a deepening property crisis and shaky economic recovery.

On Tuesday, CSRC Chairman Yi Huiman vowed to safeguard stable operation of the capital markets with full force. China's State Council, or cabinet, also pledged more forceful and effective measures to support market confidence.

The sources said regulators did not spell out specific curbs in their informal guidance, but hinted that shorting activities using stock index futures would be curbed.

Some investors were nudged to unwind their heavy short positions as soon as possible, the sources added.

The window guidance - unwritten instructions from regulators - came amid signs of a spike in shorting interest.

Futures contracts on the small-cap CSI1000 Index due in Sept 2024 tumbled on Monday by the daily maximum limit of 10%, to trade 8% below the underlying index. Turnover of the futures contracts also spiked.

Heavy stock index futures selling was partly due to risk management activities as losses on billions of dollars worth of derivatives linked to China's equity indexes forced a vicious cycle of selling in stocks and futures contracts.

LONDON/NEW YORK/HONG KONG, Jan 24 (Reuters) - Attacks in the Red Sea by Iranian-backed Houthi militants on shipping vessels have dealt global supply chains a fresh blow.

The disruption caused to shipping through the Suez Canal, the shortest sea route between Europe and Asia, have squeezed supplies in oil, grain and many other goods.

Five hedge funds shared five ideas on how to trade on the uncertainty. Their views do not represent recommendations or trading positions, which they cannot reveal for regulatory reasons.

1/ CAYLER CAPITAL

* Commodities focused hedge fund

* Size: $54 million

* Founded in 2019

* Key trade: options spread

Cayler Capital founder Brent Belote favours an options trade.

This involves selling a put option spread on December 2024 oil futures, a way of hedging bets if oil fell to a range between $60-$50 a barrel, and simultaneously buying five times as many call options which would pay off if the December contracts hit $120 in 2024.

An option bets an asset will hit a certain value, or strike price.

Belote noted that selling 100 of similar put spreads and buying 500 calls would have earned over $4 million if put on just before Russia's invasion of Ukraine.

For the trade to work, disruption in the Red Sea needs to drain supplies so much that OPEC would be unable to meet the loss, said Belote, referring to the oil-producing group.

"The primary headwind is that OPEC is sitting on a decent chunk of spare capacity through voluntary oil cuts," he said. Otherwise oil would already by above $100, he added.

2/ SVELLAND CAPITAL

* Commodities hedge fund

* Size: around $400 million

* Founded: 2016

* Key trade: Long LNG carriers

Svelland Capital director Nadia Martin Wiggen expects demand for shipping companies carrying liquefied natural gas (.LNG), opens new tab, which is turned into gas for heating and cooking, to increase long-term.

That's because of increased U.S. production and shipping, a recovery in China demand, India's booming economy, and a greater role for natural gas in the transition to renewable energy, she said.

Red Sea disruptions have pushed up LNG delivery times and the need for more vessels to deliver LNG supplies has increased.

"Despite being an increasingly polarized world, it cannot function without access to energy," said Wiggen.

3/ AUSPICE CAPITAL

* Systematic commodity quant

* Size: $1 billion

* Founded: 2006

* Key trade: long and short several commodities

As a systematic trend follower, Auspice Capital founder Tim Pickering says the fund is increasingly dependent on shorter-term strategies in the absence of clear long-term market direction.

That has meant short bets against grains commodities broadly, among the funds' many long and short positions across energies, metals and commodities.

Red Sea disruptions have pushed up the number of grain cargoes being diverted around Africa, lengthening delivery times and squeezing supplies.

"We expect commodities to tilt higher in general as we progress into 2024," said Pickering.

4/ RAIN TREE PARTNERS

* Equity long/short boutique fund

* Size: undisclosed

* Founded: 2023

* Key trade: Long China shipping and container firms

Co-founder and CEO Gengwei Lin believes Red Sea turmoil should be short-term and has not yet had a huge impact on global supply chains and suppliers.

But because short-term shipping costs have surged, Lin favors exposure to China's large shipping companies.

"China is the world's largest oil importer, it's also the world's largest goods exporter, the crisis is benefiting shipping companies," he said.

The Shanghai Containerized Freight Index, measuring non-contract rates for container shipments out of China's ports, has surged 120% since December. In contrast, the broader Chinese stock market is down almost 7% so far this month (.SSEC), opens new tab.

Lin was also positive on containers, which benefit from the re-routing of vessels.

5/ RIVERPARK FUNDS

* Strategies in equities, fixed income and venture capital

* Size: $2 billion

* Founded: 2006

* Key trade: buy companies facing supply chain issues

RiverPark portfolio manager Conrad van Tienhoven believes the attacks on vessels by Houthi militants are unlikely to last more than 12-18 months.

Given this scenario, he sees opportunities to buy consumer companies that are trading down this year on supply chain worries such as consumer goods and auto makers.

Retail brands Nike and Lululemon (LULU.O), opens new tab are down 7.5% and 6% this year, respectively.

Van Tienhoven believes both companies have excess inventory to help deal with short-term logistics issues.

He added that automaker Tesla (TSLA.O), opens new tab may also become a buying opportunity if it misses one to three production numbers in a row and shares trade down. Tesla shares are down almost 16% this month.

Tesla has said it would temporarily suspend most car production at its factory near Berlin, citing a lack of components given shifts in transport routes linked to the Red Sea disruptions.

The companies did not immediately respond to Reuters' requests for comments.