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Market Dynamics Report

May 2019: Monthly contracts down 8% vs. April, Euro Gas and Power see brokers reclaim market share, TTF down 9% MoM.

May 2019 saw monthly contracts fall for a second successive month, down 8% MoM to 8.306 million and down 18% from March's record high. In a month which has, over the past two years, seen recoveries, commodity markets saw falls across the board with UK Power down 16% and Euro Power down 11%. Euro Gas, driven by TTF's 9% MoM fall, saw the largest volume decrease of all commodity groups, down 6% MoM. Elsewhere, Emissions and Coal saw similarly large percentage falls, down 15% and 14% respectively, while UK Gas saw a smaller decline, down 7% vs. April.

Following last month's record high exchange execution market share, May saw the brokers bounce back with a strong month, rising by 2% to 64% market share (10% broker cleared and 54% broker bilateral) while exchange executed market share remained in the top three historically despite falling 2% to 36%.

Gas

May 2019 saw mixed results for the European Gas markets, amplified by TTF realising its third highest volume traded since our records begin in Jan-11 despite falling 9% MoM to 3,162 Terawatt hours (TWh). NBP also fell 7% to 1,086 TWh. PEG was one of the few strong performers in May, up 81% MoM while ZEE and NCG also finished up 22% and 16% MoM respectively. Austria VTP recorded its second highest monthly volume, finishing flat MoM, with record high broker bilateral volumes. In terms of YTD, Euro Gas volumes remained strong, with seven of the eight commodities displaying YTD growth figures above 20%, headlined by TTF which is up 48% YTD.

TTF exchange execution market share remained above 30% for the second month in a row following April's record high, accounting for 31% of the market, while the brokers reclaimed territory in broker bilateral market share, up 1% to 62%. NBP also saw its second highest exchange executed market share since records began in Jan-11, at 55%, with broker cleared 9% and broker bilateral 36%. May saw prices tumbling with NBP prices, down 18% MoM to 27.57 pence, and TTF prices, down 22% to €11.21, falling to their lowest prices since our records began in Jan-11. Could the flooding of Russian Gas into the European Gas market be what is driving down these prices so consistently?

Power

Unlike May of last year, the Power market failed to recover from a seasonally low April with both German and UK Power falling 16% MoM. Belgian Power and CEE Power provided some respite, up 26% and 20% MoM respectively. Looking at YoY movements, all nine Power commodities were significantly down from this time last year contributing to the Euro Power group falling 26% YoY. German Power saw large YoY losses of 25%, as did UK Power, down 25%, Nordic Power, down 39%, and Italian Power, down 32%, reiterating the stark contrasts to May 2018.

In terms of market share, Euro Power saw a wholesale shift away from the exchanges in May, with eight of nine commodities seeing declines in exchange executed market share resulting in a 2% movement to the brokers within the Euro Power group. German and French Power both demonstrated this shift, each with 3% decreases in exchange executed market share with broker bilateral up 4%. Belgian Power saw the largest movement, with a 10% shift from the exchanges to the brokers (6% broker bilateral and 4% broker cleared). UK Power prices fell following a mild recovery in April, down 9% MoM to £39.10, the commodities lowest price since April 2017. All other European Power prices followed the same trend, with German Power down 8% MoM to €35.36 and French Power down 11% to €33.86.

Coal

Coal volumes fell 14% to 114 million metric tonnes (mmT) driven by a 12% fall in API2, its fourth consecutive fall and its lowest traded volume since the turn of the year. API4 volumes fell 46% to 4mmT and gC Newcastle fell 13% to 17mmT. Both API4 and gC Newcastle saw market share shifts away from the exchanges (down 3% and 9% respectively) to broker cleared. Coal prices fell across the board with API2 down 4% to $56.80 and gC Newcastle down 4% to $83.40. May-19 also saw CME gain back the 6% cleared market share it lost in April to finish at 31%, with ICE holding the remaining 69%.

Emissions

May saw the Emissions group suffer its third consecutive double digit percentage MoM volume fall, down 15% to 552mmT, now a 59% collapse since the record high in October 2018. Volume in the largest emissions contract, EUAs, fell 15% to 551mmT while CERs volume rose 136% MoM. In terms of market share, EUAs saw an 8% shift directly from broker cleared to the exchanges. EUA Dec-19 prices dipped slightly below April's record high, down 7% to €24.46.

This month we have added Austrian Power on EEX to the CEE Power appendix report, and we have added Swiss Power to the appendix. Swiss Power is not yet included in the Euro Power grouping as we don't have 24 months history for it.

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