July 2017: Gas Market volume growth stalls, German Power extends MoM decline.
July 2017 produced the lowest monthly volumes since August 2015 with 5.715m contract traded. Individual market growth was hard to find with only UK Power, Austrian VTP and EUA providing any MoM volume growth. Euro Gas was responsible for the majority of the MoM decline with UK Gas and Euro Power also lower, dragging total volume down 11% compared to June 2017 levels. Despite the MoM decline, the 2017 YTD total contracts traded deficit narrowed to 13% vs YTD 2016 in line with the seasonality of market volumes. July and August have historically been the lowest trading volume months and it looks like history may repeat itself in 2017.
Contra to the last 3 months, gas markets were lower in July with MoM declines across the board led by the dominant TTF and NBP markets down 12% and 14% respectively. Austrian VTP was the only exception, which was up 36% and is the sole gas market to provide growth YTD. TTF extended leadership over NBP with 108% of NBP volumes in July. The Broker Bilateral market gave back the NBP market share it gained in June settling with 38% of the contracts traded, while the Exchange Executed market increased its NBP market share. The Exchange Executed segment held 42% of the NBP market in July 2016, 12 months later, this has increased to 54% with volumes increasing by 6% despite weaker YTD total NBP volumes. Elsewhere in the Gas markets, Exchange Executed gained market share in TTF (up 1% MoM to 28%), PEG (up 4% MoM to 28%) and Gaspool (up 0.3% MoM to 11%). Despite the relatively small MoM increases, the overall trend of a shift to exchanges is difficult to ignore.
The German Power market ended July in a similar fashion to June, lower volumes across all metrics: down 9% MoM, down 9% YTD and down 14% YoY. The Broker Bilateral market gained a further 1% market share of German Power to settle at 70% of volume; the highest percentage it has held since May-14. German Power Broker Bilateral volumes are marginal above 2016 levels and as mentioned last month all the weakness in volumes continue to stem from Broker Cleared and Exchange Executed segments. The two most active Exchanges in the German Power market, EEX and Nasdaq OMX, have both recorded lower volumes over the last 3 months. The question remains, is the recent German-Austrian Zone split responsible for the lower Broker Cleared and Exchange Executed volumes?
The French and Nordic Power markets were down 31% and 19% MoM respectively and both markets experienced a shift towards Exchange Executed. Exchange Executed market share grew by 8% in the Nordic market and 4% in the French market however, the long term market split pattern is sideways at best with no clear trend forming in either market. Elsewhere, UK Power grew volume by 4% MoM, 3% YoY but continues to be down 21% YTD.
The Coal Cleared market competition between ICE and CME continues to heat up with ICE gaining a further 2% market share in July. ICE now holds 66% of the Cleared market and has increased API2 and API4 YTD Exchange Executed volumes by over 100% and 500% respectively. The Exchange Executed segment of the API2 market gained a further 3% to settle on 28% of the monthly volume and has now grown 9% since July 2016. However, this is the only segment of the coal market that has shown any sign of growth with API2 and API4 volumes down a further 12% and 11% MoM. 2017 YTD levels continue to be in the red, API2 down 55% and API4 63% and pending a significant event 2017 volumes should lag 2016 levels for the remainder of the year.