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Market Dynamics Report

January 2019: Record month for Euro Gas, mixed performance for Euro Power, broker bilateral market share gains in five of the six commodity groups.

January 2019 saw 8.818 million monthly contracts traded, up 45% MoM following a low December, with all groups rising with the exception of Emissions. Following its record low in Dec-18, Coal rose 123% MoM, with UK Gas (63%) and Euro Gas (60%) also notable monthly risers. Volumes are up 15% vs January 2018.

Gas

All hubs rose MoM, ZEE (163%) and France Hubs (113%) the highest growers, with TTF, NCG and Gaspool registering record volume months. TTF broke the 3,000 TWh barrier for the first time with 3,058 TWh traded. NBP rose from its record Dec-18 low to 1,135 TWh traded this month. As mentioned, the German gas hubs both registered record volumes. NCG at 216 TWh, whilst Gaspool recorded 153 TWh traded. Both hubs have seen growth vs this time last year, NCG up 14% vs Jan-18, whilst Gaspool has grown an impressive 88% YoY. It will be interesting to see how these two perform over the coming year as we move ever closer to their 2021 merger.

Market dynamics in Euro Gas saw a noticeable shift during the January growth. Broker bilateral gained 5.8% share across the group, 4.1% coming from exchange executions. Broker bilateral market share gains were particularly noticeable at France Hubs (11% gain), NCG (9%) and TTF (6%), all primarily at the expense of exchange executions. It must be noted that strong growth still occurred across all three execution methods within the Euro Gas group. Broker Bilateral was up 74% MoM, Broker Cleared up 26% and Exchange Executions up 34%. What could be driving the larger broker bilateral growth?

Power

Despite the low December, it was still a month of mixed performance for the commodities within power. UK Power rose 45%, whilst Euro Power grew 19% driven by an increase in volume from its two largest contributors, German Power (34%) and Nordic Power (24%). CEE Power (-30%) and French Power (-14%) saw moves in the opposite direction. YoY volumes are up 23% for UK Power, whilst Euro Power is down 8%.

We saw a similar trend in market dynamics as seen in Euro Gas. Broker bilateral share grew 8.4% in UK Power, all from exchange executions, whilst in Euro Power the brokered market gained 1.9% at the expense of both broker cleared and exchange executions.

Coal

Following the record low of December, coal bounced back to be the standout riser of the month, up 123%. gC Newcastle grew 196% vs Dec-18 with both API2 and API4 up 116%. We also saw a shift towards the broker cleared market, with 2.4% moving there from exchange executions. CME's cleared market share for the month rose 1% MoM to 23%, with the remainder on ICE. API2 front month price was down 9% to $79.05 per tonne. Coal volumes are up 6% vs Jan-18.

Emissions

Emissions was the only faller, down 4% MoM. Following a strong 2018 as the standout performer, it now sits up 40% vs Jan-18. Market dynamics were largely unaffected this month, whilst Dec-19 EUA price was down 11% MoM at €22.30 / tonne.

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