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Market Dynamics Report

May 2017: Coal- broker bilateral volume updated due to incorrect contributed data. German Power shifts to broker bilateral.

In contrast to last year, May saw a MoM jump in monthly contracts traded, up 13% to 6.640m, almost on par with the volume achieved in May 2016. Increased volume in the gas market drove the MoM increase, as Euro and UK Gas buoyed by the increased number of trading days in May accounted for 61% of the total MoM change. Even so, it was not enough to overcome the YTD deficit, as 2017 was 13% down vs. YTD 2016.

As mentioned the Gas market drove the MoM change in monthly contracts, so understandably MoM volumes are up across the board with one exception. Gaspool saw the month's only MoM drop, down 5% to 79 TWh in May. However, the big story with Gas this month is NBP, who with a 14% jump in MoM volume, ended May 85 TWh shy of regaining the crown from TTF, closet they have been since May last year. Even with the strong performance, NBP was down 12% YoY; meanwhile TTF was flat YoY further highlighting how the dynamics between these two mature hubs has changed over the past year. France hubs saw a 52% increase in volume YoY to end the month on 72 TWh. Broker bilateral drove most of the change achieving its third highest market share to date (since Jan-11), up 7% to 80% of the months volume. YTD volumes remain a bleak picture as the Austrian VTP sees the only positive change, up 5% vs. YTD 2016.

In Power, even an 11% (57 TWh) YoY jump in the dominant German Power was not enough to change the groups' fortunes as declines in all other contracts other than CEE (up 27% YoY), saw a double figure decline. Although German Power is experiencing overall volume growth, its market dynamics are shifting. Exchange executed volumes have been declining over the past year, dropping 84 TWh YTD (11%) vs. 2016 while over the same period broker cleared volume declined 43 TWh (9%) vs. 2016 YTD. Total volumes YTD remained slightly up (0.5% vs. 2016 YTD) as broker bilateral made up the shortfall jumping 141 TWh (9%) YTD. This jump in volume drove broker bilateral market share to 64% in May-17, up 8% from May-16. Can this shift be attributed to the splitting out of Phelix Power into separate German and Austrian contracts? YTD was not a rosy picture for the rest of the group with UK Power, French power and Nordic Power down 21%, 36% and 20% respectively vs. YTD 2016.

This month LEBA, from whom we source broker bilateral data, discovered incorrect contributed data for Coal from 2016 into 2017. All cleared volume (broker cleared & exchange executed) is sourced from the exchanges and is not impacted. The over representation of broker bilateral overstated total volume by 6.5% in 2016 and 7.4% in 2017. Due to this broker bilateral market share moved from 7% in 2016 to 1% and 7% YTD 2017 to almost zero.

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Market Dynamics Report

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Market Dynamics Report