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Market Dynamics Report

August 2016 saw total volume remain relatively flat, with a 0.9% drop vs. July to achieve 5.868 million monthly contracts traded for the month. Although overall volumes remained flat, it was a different story when looking at individual commodity groupings. Emissions saw a 39% drop in monthly contract volume and along with Euro Power, which saw a 12% decline, accounted for a majority of the downward pressure on total volume. UK Power, Coal and UK Gas also saw MoM decline in monthly contract volume with 10%, 11% and 2% drops respectively. Euro Gas on the other hand, bucked the trend seeing a 0.336m growth in monthly contracts vs. July (13%). What is causing this unseasonably high volume in Euro Gas? What part does the decline in price (TTF) play in this?

YTD volumes have remained strong at 59.999m monthly contracts, up 18%. Euro Gas is once again the star performer, up 31% YTD and accounting for 66% of overall YTD volume growth. Both UK Power and Coal have shown an impressive increase in YTD volume vs. 2015, posting 27% and 28% growth respectively, although due to their relative size only contributed 3% and 6% respectively to overall volume growth.

August saw overall Euro Gas volumes up MoM. Even so, it was a mixed bag with almost half the commodities included recording a MoM gain, and the rest a MoM loss. The overall volume increase was largely driven by a 16% MoM jump in TTF to 1,673 TWh. This was 136% of the volume achieved by NBP in August, pushing its YTD volume to 109% of NBP. August marks three months in a row that TTF has been the largest commodity market by volume traded in the Euro Commodities Report. Is it now time to crown the new king? NCG saw the largest percentage growth with a 50% MoM jump to 166 TWh while Austrian VTP also a respectable increase at 22% MoM to 49 TWh. If NCG was this month's star performer, Zeebrugge is the month's worst performer, dropping 42% MoM to 46 TWh and being the only gas commodity to show negative YTD growth. NBP declined 2% MoM but remains 3% up YTD. France Hubs, Gaspool, and PSV also saw MoM declines at 7%, 10% and 5% respectively. Euro Gas saw exchange executed market share dropped 1% to 19%, while broker bilateral achieved 76% and broker cleared 5%.

Market dynamics in coal have continued to shift in August with broker cleared losing 3% market share to broker bilateral (+2%) and exchange execution (+1%). The change in dynamics is primarily coming from API2 where broker bilateral gained 4% market share MoM and exchange execution gained 1% MoM. API4 on the other hand sees exchange execution market share decline 5% MoM to 3% of total volume with broker cleared benefiting the most, growing market share by 4% MoM to 93%. The differences continue when it comes volume growth; API2 sees a MoM decline of 14% but still up 31% YTD, meanwhile API4 achieves the highest percentage increase of all commodities measured in this report at 59% MoM. Prices look to have remained stable for the month as API2 declined by only USD 0.30 vs. July. Price volatility of the API2 index as reported by LEBA on the other hand tells a different tale, more than doubling in August to 35%, the highest volatility we have seen since September 2011.

Euro Power saw monthly volume decline for the second month in a row. Nearly all regions saw a decline in volume with German Power being the main contributor, dropping 17% MoM to 398 TWh, while Spanish Power saw the largest percentage change declining 43% MoM to 9 TWh. Both French and UK Power saw double figure declines with 31% and 10% respectively. Nordic Power reversed its bottom of the table performance last month to show the highest MoM increase of 28% to 102 TWh, although is still far below the 161 TWh traded in August 2015. CEE Power also put in a good performance, up 18% vs July to 33 TWh. YTD paints a different picture with double figure growth across the board barring Italian and Nordic Power which are both up 8% YTD. Spanish Power is the YTD star with 46% YTD growth vs. same period in 2015 while both UK Power and CEE Power have put in strong efforts with 27% and 29% growth respectively. Euro Power saw a 3% shift in exchange executed market share to 32% while broker bilateral achieved 48% and broker cleared 20% of total volume.

From September the methodology used in calculating ICE traded Gas and Power volume will be updated to better represent the actual volume traded. This will be applied retrospectively and affect all ICE traded Gas and Power Commodities.

Downloadable Content

File:
Monthly Dynamics Report

Downloadable Content

File:
Monthly Dynamics Report