Market Dynamics Report

OCTOBER 14 2013

September 2013

Volumes up across the board – spotlight on Coal, German Gas and German Power

September saw volumes increase in almost all European Energy markets, with UK Power the only contract to record a decrease in volume month on month.

German Gas continues to see the biggest increase YTD 2013, with both NCG and Gaspool hubs up double digits YTD 2013 vs. YTD 2012. The German Gas market is now a fifth of the size of NBP. Just one year ago it was just over a tenth the size of NBP. Gaspool is now almost equal in size to NCG, while 12 months ago it was just less than half of NCG's size.

TTF continues to grow, up YTD 2013 vs. YTD 2012 and vs. August 2013. NBP volumes also increased vs. August; however this market is still shrinking in 2013, down YTD.

What's driving the increases in European Gas volumes? Is it traders closing out positions as the gas year rolls over at the end of September? Is uncertainty in the EU carbon markets, where prices continue to recover, driving increased gas consumption? Or is it due to more gas arriving in the region through the Nord Stream pipeline from Russia? The German Gas market is still traded majority broker bilateral; however we will keep an eye on composition in the coming months as exchanges focus efforts in this burgeoning market.

September 2013 also saw record volumes in the key European Coal contracts of API2 and API4. September also saw an increase in broker bilateral share in both contracts. In fact broker bilateral traded volumes grew significantly in September vs. August 2013. Block futures volume remained stable as a percentage of cleared volume in September.

German Power volumes were up significantly this month, recording growth both MoM and YoY. YTD 2013 vs YTD 2012 volumes are also up. Both the exchanges and the brokers benefited with these increased volumes, although the brokers lost share – with the cleared market growing, up vs. August 2013 and vs. September 2012.