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Market Dynamics Report

September 2017: Strong volume growth across the board, Gas shifting to bilateral and French Power prices surge. 

September marked the first month of autumn with higher volumes. Monthly contracts traded up 22% MoM to 7,817m. The growth in contract volume came from the Continent with Euro Gas and Euro Power accounting for 81% of the increase. The strong performance reduced the YTD deficit by 1% to end the month down 10% at 61,314m month contracts.

German Power was the main contributor to the MoM increase, up 221 TWh (46%). The strong performance from German Power was up over Sept-16 but not enough to significantly reduce the YTD deficit, down 261 TWh at 4,988 TWh. Volume continues to shift towards broker bilateral, up 43% in September and pushing YTD market share to 65% (vs. 57% YTD 2016).   

The rest of the Power markets saw MoM volumes up across the board. CEE Power has continued its strong performance seen in 2017 being the only Power commodity covered to show MoM, YTD and YoY growth. Spanish Power saw a 72% growth in broker bilateral volume driving its market share up 10% to 33% of total volume. This increase comes at the cost of broker cleared and returns broker bilateral to the market share seen in 2016.  French Power took the title of highest MoM percentage increase, up 68% while at the same time, had the highest increase in front month prices, up €13.36 over August. Interestingly this is a seasonal trend seen with French Power and is not visible in any other Power commodity followed. Each year as autumn begins, prices increased an average of 24% MoM since 2013; meanwhile, volumes increased an average of 66% MoM (since 2013). Maintenance and safety issues affecting French nuclear power plant capacity have been the driver of the autumn price rise for the past two years.

NBP could not follow up on last month’s strong performance, down 3% MoM to 1,531 TWh. In contrast, TTF had the strongest nominal MoM growth of all gas commodities, up 326 TWh to 1,913 TWh. This allowed TTF some breathing room as the gas hub of choice with 125% of NBPs volume. Gaspool showed the biggest percentage increase in September up 76% vs. August. Although Gaspool did not win by much, PSV increased 73% MoM and had the highest cleared volume on record (since Jan-11). The YTD picture remains the same for most, although stronger performance in the last few months from PSV and France Hubs have surpassed YTD 2016 volumes to both be up 1%. Overall, the Gas market share took a swing towards broker bilateral, up 4% vs. August with both broker cleared and exchange executed market share declining by 2%.

Coal markets remained down compared to 2016, although they have followed the trend of MoM gains with API2 and API4 up 55% and 16% respectively. API4 saw its second highest exchange executed volume on record (since Jan-11) accounting for 12% of volume traded. Even with the large MoM increase, Coal is far from returning to the volumes seen this time last year as with API2 and API4 both down 44% YoY. Coal prices have remained stable in contrast to last year, one-month price volatility (as stated by LEBA) for API2 is 4% in September. This is the lowest one-month volatility seen in API2 prices since Sept-11.

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