February 2018: Volumes up YTD; broker bilateral gives up market share; Euro Gas volumes robust, TTF volumes 180% of NBP.
Volume growth across the Euro Commodities markets was varied this month as monthly traded contracts grew 6% YTD 2018 vs. YTD 2017 but declined 2.8% MoM to settle at 7.454 million monthly contracts traded (February had 20 trading days vs. January’s 23). Euro Gas, Emissions and Euro Power were positive contributors of the YTD growth, up 22%, 15% and 3% respectively. The remaining commodity groups posted YTD declines in volume, with UK Power down 27%; Coal down 18%; and UK Gas down 16%.
February 2018 saw broker bilateral give up market share in four commodity groups vs. January 2018; Euro Gas down 6%; Euro Power down 3.7%; UK Gas down 3.3%; and Emissions down 2.7%. The decline in market share reverses the gains broker bilateral recorded in January 2018. Could the implementation of MiFID II only have a temporary effect on market behavior or will there be a longer-term trend that is yet to play out in the markets?
Euro Gas recorded a solid month of volumes, its fourth highest on record since January 2014. All regional markets experienced YTD volume increases, in addition six out of seven regional markets posted YoY volume increases as well (ZEE was the only market that declined YoY, down 16%). TTF recorded its second largest month of volumes with 2,299 TWh traded and posted volume increases across all three time frames; 2% MoM; 23% YTD; and 30% YoY. To put this growth into perspective, February TTF volumes were 180% of NBP. Interestingly, NBP volumes declined across all 3 metrics; down 8% MoM; down 16% YTD; and down 23% YoY. Evidence of the cold weather snap affecting NBP markets was difficult to find despite media headlines indicating a potential gas shortage and spot prices spiking to multi year highs.
Euro Power finished February up 3% YTD 2018 vs. YTD 2017 largely driven by significant growth from French Power up 66% YTD; Italian Power up 36%; and Spanish Power up 25% YTD. These gains were offset by German Power, down 2% YTD and Nordic Power, down 14% YTD. Broker bilateral lost market share in six out of the eight regional markets in February 2018 vs. January 2018 with Spanish Power dropping 7%, Italian Power dropping 5% and Belgian Power dropping 5%. In a similar trend to the gas markets, UK Power volumes declined across the board losing 5% MoM, 27% YTD and 21% YoY.
In the coal markets, broker cleared gained a further 4.2% market share in February 2018 vs. January 2018 and have now added 13.5% market share YTD 2018 vs. YTD 2017 at the expense of exchange executed. CME clawed back market share in the cleared coal market holding 29% of volumes in February compared to 22% in January 2018. ICE continues to be the dominant player in the coal market holding the other 71% of cleared volumes. Front month price of the API2 contract declined 9% MoM to settle at US$81.55 per metric tonne.