Market Dynamics Report

JUNE 16 2014

May 2014

Volumes down across the board in Gas, Power and Coal. An exchange goes live with its new coal initiative.

May 2014 saw a significant drop in volumes and prices in the UK Gas market and all of the key European Gas markets. NBP and TTF experienced a monthly drop in volumes to their lowest levels of 2014 to date. Despite these declines, both NBP and TTF volumes are significantly higher than 2013 YTD. The TTF market remains heavily brokered with the majority of the volume in both TTF and NBP being executed bilaterally.
Volumes were significantly down in the main European Power markets this month. German Power volumes fell vs. April while French Power volumes were also down. Year to date German Power volumes are down vs. 2013 with the drop in volumes coming from the brokered market. This is in contrast to the exchange executed market which has seen volumes increase for the year to date. This highlights the shift to clearing in the German Power market for May 2014.
UK Power volumes were down vs. April, which was the highest month since March 2011. May 2014 was the second month since the implementation of the OFGEM initiative, which was set up to boost liquidity in the UK Power market. While we have seen a drop in volumes MoM, volumes in May were up vs. the same period in 2013.
API2 saw volumes decline vs. April, while API4 volumes also declined. One major commodities exchange still remains the preferred choice of clearing venue in the Euro Coal market with a significant combined market share. On May 21st, an exchange launched its new coal initiative bringing another participant into this increasingly competitive market. Will they be able to establish themselves as a key player in the cleared coal market in the coming months?