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Market Dynamics Report

December 2018: NBP and Coal lowest months on record, recap on 2018, total volume up 10% vs 2017, TTF and EUA standout years.

Total monthly contracts traded in December came in at 6,076,181, down 32% MoM. All groups dropped in the seasonally low month of December, led by Coal    (-64%) and UK Gas (-43%), with Euro Gas and UK Power both falling 32%. Total 2018 monthly contracts traded ended at 91,538,536, up 10% vs 2017.

2018 saw TTF rise to new heights, with NBP’s simultaneous retreat changing the landscape of the European gas market. The ‘Beast from the East’ gripped Europe early in the year, plunging gas inventories to a five-year low, while the default of Einar Aas in September sent a shockwave through the power market. Elsewhere emissions prices more than doubled YoY, fuelling volatility within the market.  

Looking ahead to 2019, we wait to see what impact Brexit will have on European markets, whether a continued increase in LNG trading will impact volumes, and if the continued rise of renewables influences market dynamics.

Gas

NBP volumes retreated 43% this month to record the lowest volume since Jan-11 at 697 TWh. TTF fell 33% MoM, resulting in a record 279% of NBP’s volume for December – does this signal the end of the TTF as a percentage of NBP metric? YoY figures see Euro Gas volumes up 7% vs Dec-17, with UK Gas down 37%. TTF front month price ended up 12% vs Dec-17, while the NBP front month price was up 8%.

Euro Gas closes the year up 24% vs 2017, driven by TTF’s 28% rise vs 2017. With NBP falling 17%, TTF’s volume for 2018 was 188% of NBP’s total. We have commented extensively about TTF’s record volumes this year and its growth over the past eight years to become the benchmark European gas hub. How much has hedging of LNG influenced TTF figures and where will this lead volumes in 2019?  Away from the headline story, we have seen growth vs 2017 from all gas markets with the exception of NBP (-17%) and ZEE (-9%). Austria VTP grew 22%, whilst France Hubs, beset with volatility particularly in the first half of the year, ended with volumes up 21%. In terms of market share, Euro Gas saw a 3% shift away from exchange executions vs 2017, with 2% moving towards broker bilateral. This represents a reversal of the trend we have seen over the past few years, where Euro Gas market share has been moving from broker bilateral to exchange executions. Could MiFID II be behind this movement?

Power

YoY both Euro Power (-11%) and UK Power (-9%) volumes are down. Front month German Power prices were up 45% vs Dec-17, with UK Power up 15%.

Euro Power ends the year flat vs 2017 volumes. Belgian Power (42%) and Italian Power (25%) saw the largest growth in the group, with German Power up 2%. All others were flat or down vs 2017 with French Power (-11%) and Nordic Power (-7%) the largest fallers. Whilst group volume may be flat, there has been a shift in market share. Broker bilateral share declined just under 4% vs 2017 levels, with 2% shifting to broker cleared and 1% moving to exchange executions. This represents a change in the movement seen from 2016 to 2017, where broker bilateral gained 6% share, 4% coming from exchange executions. It leaves broker bilateral up 2% vs 2016 levels at the expense of exchange executions. The default of Einar Aas is likely to have contributed to Nasdaq’s share of the Nordic Power market falling from 79% in September to 64% in December. UK Power fell 6% vs 2017 levels, with market share shifting slightly vs 2017, 1% moving to exchange executions to end at 82% Broker Bilateral / 18% exchange executions.

Coal

Coal volumes fell 64% MoM to record the lowest volume since Jan-16 at 62 million metric tonnes. This follows a four-month streak of volume growth. CME’s cleared market share for December rose 5% to 22%, with ICE holding the remaining 78%. API2 front month price fell 2% MoM to US$86.70 per tonne. YoY, coal volumes are down 31%, and prices down 9%.

Coal ends the year with volumes down 16% vs 2017, marking a second straight year of declines. We saw 10% of market share move to exchange executions at the expense of broker cleared. This continues the trend for the past two years of a shift to exchange executions, rising from 9% share in 2016 to 36% in 2018. Broker cleared fell from 86% to 64% over the same period.

Emissions

Emissions fell 25% MoM, with EUA volume down 25%, whilst CER saw 124% growth off a low base. YoY, emissions volumes are 20% higher than Dec-17.

Emissions finished as the stand out performer of 2018, up 41% vs 2017. We saw a shift in market share towards the cleared market, with broker cleared gaining 6%, exchange executions falling 1% and broker bilateral conceding 5%. This is contrary to the past couple of years where we have seen growth in the broker bilateral market. At the end of 2017 EU reforms were introduced to reduce emission permit surplus and raise carbon prices. With EUA Dec-19 price rising 203% YoY, are these reforms the driver of emission’s growth? How will carbon prices grow in 2019 - will they break past €30 / tonne? How will Brexit impact the emissions market?

Downloadable Content

File:
Euro Commodities Report


19.12.18

November 2018: TTF volumes continue to rise, Emissions volume data correction and coal volumes up 18% MoM

November 2018: TTF volumes continue to rise, Emissions volume data correction and coal volumes up 18% MoM.

Total monthly contracts traded in November came in at 9,884,471, down 4% MoM. The decline was mainly due to lower Emissions, Euro Power and UK Gas volumes while Coal and Euro Gas bucked the trend by posting MoM volume increases. Total 2018 YTD monthly contracts traded are up 11% to 85.5m vs 2017 YTD. LEBA, from...


15.11.18

October 2018: TTF and EUA continue their rapid growth with further records; power market volume traded down MoM; coal market YTD volumes continue trend of decreasing volume and increasing exchange execution market share

October 2018: TTF and EUA continue their rapid growth with further records; power market volume traded down MoM; coal market YTD volumes continue trend of decreasing volume and increasing exchange execution market share.

October 2018 saw a continuation of September's trends, with both TTF and EUA posting record volumes traded. Monthly contracts traded were up 6% vs. September, led by Emissions, Euro Gas and Coal, up 26%, 12% and...


17.09.18

September 2018: TTF and EUA with record volume months, German Power highest since Nov-16.

September 2018: TTF and EUA with record volume months, German Power highest since Nov-16.

September 2018 was a tale of the large commodities within the groups driving high monthly figures. 8.888 million monthly contracts were traded, up 29% MoM, with all groups rising vs August. Emissions was the standout up 60% as its strong year continued. Euro Power rose 46% MoM, reaching a high not seen since Nov-16, with Euro Gas rising 24%...


13.09.18

August 2018: Volumes bounce back following low July, cleared market records in NBP.

August 2018: Volumes bounce back following low July, cleared market records in NBP.

August 2018 saw 6.912 million monthly contracts traded, up 16% MoM, signalling the end of the summer lull in trading. All groups rose MoM, UK Power the standout up 26% with UK Gas also strong up 24%. Euro Gas drove the MoM growth however, up 18% MoM it accounted for 54% of the total monthly growth. YTD we have seen 58.864 million monthly...


09.08.18

July 2018: Lowest volume since April 2017, YoY TTF growth masks Euro Gas decline, German Power drives Euro Power YoY growth.

July 2018: Lowest volume since April 2017, YoY TTF growth masks Euro Gas decline, German Power drives Euro Power YoY growth.

July 2018 saw 5.953 million monthly contracts traded, down 18% MoM, with total volumes the lowest recorded since April 2017. All groups fell vs June - UK Gas most notably down 28%, with Euro Gas, Euro Power and Coal all dropping 17% MoM. YTD we have seen 51.953 million monthly contracts traded, up 9% vs...


16.07.18

June 2018: Volumes down across the board, German Power down YTD vs 2017, France Hubs volatility continues.

June 2018: Volumes down across the board, German Power down YTD vs 2017, France Hubs volatility continues.

June 2018 saw 7.287 million monthly contracts traded, down 14% MoM. High temperatures across Europe appear to have brought the summer trading lull a month earlier than 2017. All groups fell vs May, UK Power the highest with a 22% drop, with Emissions (18%), Euro Power (14%) and UK Gas (13%) showing notable drops too. YTD...


13.06.18

Volumes up across the board MoM, mixed performance YTD.

Volumes up across the board MoM, mixed performance YTD. TTF remains strong, exchange executions break 40% market share in Coal.

May 2018 saw 8.408 million monthly contracts traded, up 22% MoM following a low April. All groups rose vs April, with UK Power the highest, recording a 31% MoM increase. Euro Gas, UK Gas and Euro Power also saw noticeable increases at 26%, 25% and 23% respectively. YTD we have seen 38.605 million...


15.05.18

April 2018: Volumes drops following a strong March, Euro Power up YoY, broker bilateral gains in EUA

April 2018: Volumes drops following a strong March, Euro Power up YoY, broker bilateral gains in EUA.

April 2018 saw 6.893 million monthly contracts traded, down 15.7% vs March 2018. All groups except Emissions saw MoM declines, with Euro Gas the greatest, down 28% (1,199 TWh) to 3,155 TWh. UK Power and Coal also saw noticeable drops of 11% and 7% respectively, with UK Gas and Euro Power experiencing a smaller percentage but...


17.04.18

March 2018: Broker bilateral volume gains in Euro Gas, TTF and France Hubs set record monthly volumes and Emissions see price and volume jump.

March 2018: Broker bilateral volume gains in Euro Gas, TTF and France Hubs set record monthly volumes and Emissions see price and volume jump.

March 2018 saw 8.181 million monthly contracts traded, up 9.8% vs. February and although March had one more trading day than February, this is still the first time since March 2017 that monthly contracts have broken the 8 million mark. UK Power, Emissions and Euro Gas...