June 2018: Volumes down across the board, German Power down YTD vs 2017, France Hubs volatility continues.
June 2018 saw 7.287 million monthly contracts traded, down 14% MoM. High temperatures across Europe appear to have brought the summer trading lull a month earlier than 2017. All groups fell vs May, UK Power the highest with a 22% drop, with Emissions (18%), Euro Power (14%) and UK Gas (13%) showing notable drops too. YTD we have seen 45.990 million monthly contracts traded, up 10% vs YTD 2017.
Euro Gas fell 12% MoM yet its strong year continues, up 21% in both YTD and YoY metrics. YTD we have seen a 3% increase in broker bilateral at the cost of exchange executions. TTF declined 15% MoM to 2,026 TWh, its volume now at 154% of NBP. Broker bilateral fought back from last month’s loss with a significant 5% market share increase at the expense of both broker cleared (-2%) and exchange executions (-3%). TTF remains up YTD (24%) and YoY (23%). NBP fell 13% MoM to 1,314 TWh, echoing declines in YTD (14%) and YoY (16%) metrics, with broker bilateral gaining 3% market share MoM. France Hubs (60%) was the standout riser MoM, continuing its volatile start to the year. In March we mentioned the regulatory requirement to increase French Gas reserves, what else could be behind this volatility?
Euro Power fell 14% MoM however remains up 2% YTD. All nine commodities retreated MoM - a reversal of last month’s increase across the board. German Power and Nordic Power both fell 12%, with UK Power down 22%. Dutch Power and Belgium Power saw the biggest decrease at 28%. In German Power, broker bilateral volumes are up 8% YTD at the cost of the cleared market. How much has the German/Austrian split influenced this trend? UK Power dropped in all three metrics, with exchange executions taking 3% market share from broker bilateral. CEE Power was also noteworthy, a 17% increase in exchange executions after broker cleared volumes fell to zero.
API2 and API4 both declined MoM while gC NEWC was flat. Coal continues its downward trend, down 20% vs YTD 2017. Broker cleared managed to regain some market share, up 3% MoM to 61%. YTD Broker cleared has lost 14% market share to exchange executions. CME gained 4% market share, up to 24%.
Emissions fell 18% MoM, following the seasonal trend of the market, yet it remains the standout performer of the year so far, up 56% YTD and 78% YoY. EUA price for Dec-18 rose 1% to €14.99, YTD it has grown 62%. Can we tie this into the EU reforms that took place at the end of 2017, which targeted emission permit surplus and low carbon prices? With falling supply and market forces now at play, has this succeeded in increasing prices and liquidity?