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Market Dynamics Report

February 2017: Volumes continue to decline, prices cool off but UK Gas swims against the tide.

February picked up January's trend and ran with it as the majority of commodity groups continued MoM and YoY declines in volume. Monthly contracts traded across all commodities totaled 6.674m in February 2017, down 10% from January 2017 and 25% below that of February 2016. The declines in volume were across the board with all commodity groupings seeing both MoM and YoY declines except for UK Gas, which posted an 8% MoM increase in monthly contracts.

The color of choice for Power this month is red as there were broad declines across all power markets. German Power was the worst hit with February volumes, down 221 TWh MoM and 123 TWh YoY, the largest decline in both nominal and percentage terms for the group. The declines were not exclusive to the more dominant power regions with Italian, Spanish and CEE power seeing YoY declines of 49%, 64% and 24% respectively. The lower volumes were accompanied by lower prices with double digit declines in front month prices for the majority of the power markets, Nordic Power baseload stood out with only a 1% decline.

The story is very much the same when it comes to Gas, although there are a few splashing's of black to make the picture a little less mono-colored. As mentioned earlier, NBP was the MoM star seeing a jump of 121 TWh in volume traded during February, although still 32% below February 2016 volumes. TTF saw the largest monthly decline, dropping 8% to 1,924 TWh vs. January 2017 but even this was not enough for TTF to lose its crown, posting 107% of NBPs monthly volume. PSV saw only minor increase from January, up 1% each but the story is far less marginal YoY, down 20%. Austrian VTP was the sole gas market to notch a YTD rise, up 8%, 13% of this volume was executed through the exchange, the highest market share recorded (since Jan-11).

The declines continued in the coal markets, with API2 and API4 down 51% and 72% YTD respectively. One does need to consider the high volumes traded in February 2016, even so, both API2 and API4 volumes were considerably lower when compared to January 2017, down 27% and 65% respectively. The Broker Cleared segment lost further ground to Broker Bilateral and Exchange Execution with API2 clearing 64% of trades via Broker Cleared. This figure stood at 94% of the market 12 months ago. ICE held 58% of the cleared coal market up 7% on January while CME held the other 42%.

Emissions were no exception to the overall trend, down 17% MoM and down the same percentage YTD. Broker Bilateral continued their push into the emissions market with 19% of all volume, up 1% on January and up 11% since February 2016.

 

Downloadable Content

File:
Euro Commodities Report


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