March 2017: Spotlight on Coal. Volumes rebound from a slow start to 2017. PolPx volumes added to CEE Power.
March closes the quarter with a brighter tone as volumes across the board see largely double-digit MoM growth. Monthly contracts traded across all commodities was 8.344m; this is up 24% vs. February and is the highest number of monthly contracts traded since June 2016. Euro Gas was the largest contributor, accounting for 63% of the increase in contracts traded. Nevertheless, all commodity groupings except NBP saw double figure growth in traded contracts. Unfortunately, this strong turnaround was not enough to overcome a slow start to the year, as YTD total monthly contracts traded are 10% below the same time last year.
Gas market volumes surged MoM but with some very clear star performers. TTF dominated the MoM growth jumping 553 TWh (31%) over February. This outperformance has turned around the slow start for the year, ending the quarter up 1% vs. YTD 2016. Although from a smaller base, the winner for the largest MoM percentage increase goes to PSV, up 135% vs. February. Overall, PSV is up 8% YTD and 61% YoY. This increased volume has pushed PSV past Gaspool to become the fourth largest gas commodity on YTD volume. Austrian VTP is another strong performer, posting 15% YoY growth and up 14 TWh YTD. Last month NBP showed signs of resurgence, reducing TTF’s dominance by posting the only positive MoM growth, but the tables have turned back to the norm as NBP saw a comparatively flat MoM growth of 2% vs. February. This left TTF to dominate with 138% of NBP’s volume.
The surge in volumes continued for Power. German Power dominated the absolute MoM growth, jumping 202 TWh (43%) over February. This was double the increase seen from all other Power commodities combined. To add to this, German Power was the only category to see a YTD increase, up 6% vs. 2016. Even so, there were some other strong performers. Spanish Power was up 111% MoM and 12% YoY while volume moved away from broker bilateral, down 12%, in favor of broker clear who were up 11%. CEE Power also performed well, with volume jumping 55% MoM and 36% YoY. This month we have added both historical and current PolPx trading volumes to the CEE Power grouping.
EUA volumes continue the positive picture, up 18% MoM and 24% YoY. Unfortunately, the stellar performance in March has not been enough to overcome the slow start to the year, down 6% YTD vs. 2016. Exchange execution increased its market share of EUA volume by 10% at the expense of broker bilateral. CER’s have shown growth in all metrics, with YTD volumes almost 8x the volume seen in YTD 2016.
Coal followed the MoM trend set by others with API2 and API4 jumped 31% and 88% respectively. However, looking at the Coal market over a longer time horizon paints a different picture. Volumes are down 50% YTD vs. 2016; meanwhile prices remain high, 62% up YoY. API2 front month price volatility as reported by LEBA, dropped to 12% in March 2017, the lowest we have seen since April 2016 and far from its high of 65% in October 2016. What is driving this dramatic cooling in volumes?