March 2019: TTF up 22% vs February to surpass 3,800 TWh, NBP grows 27% MoM, German Power down 5% MoM, Emissions down vs February.
March 2019 saw 10.083 million monthly contracts traded, up 12% MoM, a record high and the first time the figure has broken 10 million contracts traded (since our records began in Jan-11). Euro Gas drove the volume, up 17% MoM, contributing to over 85% of the total MoM change as we saw TTF reach a new high. UK Gas rose the most in percentage growth terms, up 27%, whilst Coal (up 5%) and UK Power (up 4%) saw smaller increases. Emissions’ volume volatility so far this year continued, down 11%, whilst Euro Power fell 4% vs February. YTD monthly contracts traded are 27.884 million, up 20% vs 2018.
Euro Gas saw 4,567 TWh traded, up 17% MoM. The group broke the 4,000 TWh for the first time in what has been an incredible start to the year. TTF, which this month made up 84% of Euro Gas volume, rose 22% to record 3,823 TWh, continuing its streak of a new record every month this year. Volume for each of the three execution methods (Broker bilateral, broker cleared, exchange executions) was at an all-time high, however exchange executions gained a significant 6% market share from broker bilateral. TTF market share split for March was 64% broker bilateral (a record low share), 7% broker cleared and 28% exchange executions (a record high share). What could be driving this shift towards the exchanges, and will we see further share moving in that direction as volume grows? Previously we mentioned the impact of LNG demand on TTF. Front month TTF prices have fallen 48% since September 2018, and more recently it was reported that S&P Global Platts’ Japan/Korea Marker (JKM) price – the key Asian LNG benchmark – fell below the TTF price. How much could this have affected volumes? Furthermore, smaller European hubs are registering record figures (which are generally traded as a spread to TTF), whilst the delay to Brexit likely aids volumes of the Euro denominated commodity. Market dynamics are evolving, we await to see what the seasonally lower month of April brings.
Away from the headline making TTF, NBP saw strong growth, up 22% MoM to 1,270 TWh. Last month we spoke of TTF being three times the size of NBP. This continued in March where TTF was 301% of NBP’s volume this month. The German hubs saw mixed MoM performance, NCG fell 25% MoM from its February record, whilst Gaspool rose 2% - both hubs still recorded monthly volume in the top three historically. Elsewhere, ZEE was the largest monthly riser, up 72% MoM, with France Hubs the largest faller, down 34%. Austria VTP and PSV both registered record volumes too.
Euro Power fell 4% MoM with five of the eight commodities falling vs February. Belgian Power saw the largest drop, down 32%, with Nordic Power down 16% and German Power falling 5%. French Power, which is down 30% YTD following a strong start to 2018, fell 1% MoM, with 6% market share moving to the cleared market this month. Across Euro Power as a whole, market share was largely unaffected this month, with share in German Power flat across all three execution methods. Front month prices for German Power continued downwards, falling 7% this month. Looking at YTD figures, Euro Power is up 1%, with German Power up 6%.
UK Power volume rose 4% MoM, with market share largely unaffected; it is currently 9% up vs YTD 2018. Front month price has fallen 23% since the start of the year, compared to a year ago when prices were flat over the same period. Could this be driving increased volatility?
Coal volumes rose 5% MoM, driven by a 71% increase in gC Newcastle volume. API2 fell 1% with API4 down 13%. Within coal as a whole, broker cleared volumes rose 1.6%, driven by a shift in API2 execution. Interestingly, gC Newcastle’s growth saw 8% market share moving to exchange executions at the expense of broker cleared, however its volume has a smaller influence on group dynamics compared to API2. CME’s cleared market share rose 6% to 31%, with ICE holding the remaining 69%. API2 front month price was down 6% MoM at $70.40 per tonne, and coal volumes are down 5% vs YTD 2018.
Emissions fell 11% MoM in what has been a slightly volatile start to the year in terms of volume, particularly in light of its growth towards the end of 2018. The group is up 19% vs YTD 2018, down from a figure of 40% last month. Dec-19 EUA price fell 1% to €21.54 / tonne. CER, which records a very small amount of volume compared to EUA, was up 194% MoM, we have seen similar fluctuations before. Market dynamics were largely unaffected, how much could uncertainty on Brexit be preventing any consistent monthly growth this year?