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Market Dynamics Report

The Euro Commodities Report is signing off 2015 with a new leader across the gas and power monthly volumes we report on. This month for the first time, TTF moved ahead of NBP as the largest commodity by volume traded. At 1,201 TWh traded in December 2015, the Dutch trading point for natural gas moved to 112% of total NBP volume this month, up from 94% during November-15.

As the year drew to an end, so too did the upward trend in monthly contracts. December has traditionally seen a drop in volumes, and Dec-15 was no different, with volumes down 19% this month to 5.858m monthly contracts. UK Gas volumes were down 33% MoM with exchange executed volumes down 41% vs. Nov-15. It was a similar story in the Euro Gas and Coal markets with total volume down 17% and 27% respectively. The Emissions market ended the year up 29% MoM driven by strong volume growth in EUAs.

The drop in volumes this month was coupled with a change in market structure as there was a shift away from the cleared market in gas. This was particularly evident in NBP and TTF where broker bilateral gained 4.5% and 6.2% share respectively, whilst there were smaller increases in NCG (1%) and Gaspool (2%).

Last month saw the inclusion of exchange spot volume data into the total volume data series for each commodity and this month we have followed that up with addition Austrian VTP gas to the report.

The 2015 Wrap Up:

There were two main themes evident in the Euro Commodity markets during 2015:

Euro Gas & Power and Coal growth;
Continued shift towards cleared market.
1. Euro Gas, Euro Power and Coal Volume Growth

Euro Gas, Euro Power, and Coal markets all saw volume increases during 2015. Coal volumes were up 24% in 2015 vs. 2014. API2 hit monthly volume records twice during the year. The first high was in January with 322 million metric tonnes (mmt) (previous high 268 mmt, Sep-13). This was surpassed in September with 347 mmt traded. API2 prices have seen a substantial decline throughout 2015. Is the volatility in price driving increased volumes in API2?

Euro Gas volumes were up 20% 2015 vs. 2014. The main contributor in the Euro Gas grouping was again TTF. Following the 61% annual growth we reported in 2014, TTF volumes were up 24% in 2015 vs. 2014. TTF saw record volumes in Q1 and a strong finish to the year has pushed TTF to the top of gas leaderboard by volume. It will be interesting to monitor the dynamic between TTF and NBP volumes over the next 12 months and see who sits on top at the end of 2016.

Euro Power volumes were up 7% in 2015. The largest increase occurred in French Power with total volumes up 41% in 2015. EEX strengthened its presence in French Power with financial contract volumes up 261% 2015 vs. 2014. German and Italian Power were both up 7% and 8% respectively with EEX growing in both markets.

2. Increased Clearing

2015 saw the bilateral market lose share across all groupings covered in this report. The most substantial changes in market structure were seen in Euro Power, Euro Gas and UK Gas, where the cleared market gained 12%, 8% and 6% respectively YoY. Dec-15 cleared market share was 57% in both Euro Power and UK Gas. The bilateral market still accounts for 75% of Euro Gas Volumes.

European Energy Markets Composition: Broker Bilateral, Broker Cleared and Exchange

European Energy Markets Composition: YTD Trends

European Energy Markets Composition: Rebased Price Trends over Time

Downloadable Content

File:
Monthly dynamics report December 2015

Downloadable Content

File:
Monthly dynamics report December 2015