x

Market Dynamics Report

January 2017: Volumes down YoY; German Power & Austrian VTP buck the trend; Emissions sees a dynamics shift.

In contradiction to last year, 2017 has started without a bang with all commodity groupings posting a YoY decline in volume. Monthly contracts for January 2017 were 7.434m, down 16% vs. 2016 but up 26% MoM. Coal led the downward trend seeing a 52% drop in monthly contracts vs. Jan-16, although up 55% vs. Dec-16. Both UK Power and UK Gas showed double figure YoY declines, posting 19% and 27% less monthly contracts respectively.

German Power was the only Power commodity to see a rise in YoY volumes, posting an 8% increase over Jan-16 to 686 TWh. This jump in volume traded was echoed by front month price, which jumped €10.77 over Dec-16, the highest level seen since Oct-12. Broker bilateral has benefitted from this increased action accounting for 61% of the volume traded, up from 55% in Dec-16 and 58% in Jan-16. Nevertheless, even though German Power holds a dominant position in the Euro Power grouping, its YoY growth was not enough to overcome the declines seen in the other commodities, as the group as a whole declined 12% YoY. French Power was the main driver of this YoY decline, dropping 63% vs. Jan-16 to 59 TWh traded while both Italian Power and Nordic Power declining 43 TWh (53%) and 29TWh (16%) respectively vs. Jan-16. UK Power followed the trend of its Euro-denominated counterparts dropping 19% vs. Jan-16 to end the month with 120 TWh traded. Even so, UK Power did see a MoM increase of 13% over Dec-16.

As German Power bucked the downward trend in the Euro Power, Austrian VTP bucked the trend in Euro Gas by posting a 24% increase in volume vs. Jan-16. All other commodities in the group saw a YoY decline with PSV seeing the highest percentage YoY decline, down 24% vs. Jan-16. TTF accounted 65% of the total groups YoY decline dropping 132TWh (6%) vs. Jan-16 to 1,929 TWh. Meanwhile, NBP saw a 577 TWh (27%) decline YoY, helping TTF start the year clearly on top with 125% of NBP's volumes. This is in contrast to Jan-16 where record volume growth saw them just fall short of taking the crown with 97% of NBP's volumes. MoM tells a different story with most Gas commodities seeing double figure growth vs. Dec-16. The only Gas commodities to see a MoM decline were NCG and ZEE, down 8% and 4% respectively vs. Dec-16.

Emissions saw a significant change in dynamics as broker bilateral accounted for 18% market share, that's up 17% from Dec-16. EUA's were the main driver of this change posting their highest broker cleared market share since Jan-11. Exchange executed also a MoM increase in market share resulting in broker cleared losing 26% market share vs. Dec-16.

Coal was an interesting story in 2016, with both prices and volumes rising, the dominance of broker cleared market share was eroded. Broker cleared volume for 2016 decreased 6.7% vs. 2015, while both exchange executed and broker bilateral volumes growing exponentially resulting in 2016 broker bilateral closing the year off at 7% of total volume. With the first month of the year down, this looks to be the new norm as broker bilateral and exchange executed accounted for 10% and 17% of January's volume respectively.


Downloadable Content

File:
Market Dynamics Report

Downloadable Content

File:
Market Dynamics Report