In contradiction to last year, 2017 has started without a bang with all commodity groupings posting a YoY decline in volume. Monthly contracts for January 2017 were 7.434m, down 16% vs. 2016 but up 26% MoM. Coal led the downward trend seeing a 52% drop in monthly contracts vs. Jan-16, although up 55% vs. Dec-16. Both UK Power and UK Gas showed double figure YoY declines, posting 19% and 27% less monthly contracts respectively.
German Power was the only Power commodity to see a rise in YoY volumes, posting an 8% increase over Jan-16 to 686 TWh. This jump in volume traded was echoed by front month price, which jumped €10.77 over Dec-16, the highest level seen since Oct-12. Broker bilateral has benefitted from this increased action accounting for 61% of the volume traded, up from 55% in Dec-16 and 58% in Jan-16. Nevertheless, even though German Power holds a dominant position in the Euro Power grouping, its YoY growth was not enough to overcome the declines seen in the other commodities, as the group as a whole declined 12% YoY. French Power was the main driver of this YoY decline, dropping 63% vs. Jan-16 to 59 TWh traded while both Italian Power and Nordic Power declining 43 TWh (53%) and 29TWh (16%) respectively vs. Jan-16. UK Power followed the trend of its Euro-denominated counterparts dropping 19% vs. Jan-16 to end the month with 120 TWh traded. Even so, UK Power did see a MoM increase of 13% over Dec-16.
As German Power bucked the downward trend in the Euro Power, Austrian VTP bucked the trend in Euro Gas by posting a 24% increase in volume vs. Jan-16. All other commodities in the group saw a YoY decline with PSV seeing the highest percentage YoY decline, down 24% vs. Jan-16. TTF accounted 65% of the total groups YoY decline dropping 132TWh (6%) vs. Jan-16 to 1,929 TWh. Meanwhile, NBP saw a 577 TWh (27%) decline YoY, helping TTF start the year clearly on top with 125% of NBP’s volumes. This is in contrast to Jan-16 where record volume growth saw them just fall short of taking the crown with 97% of NBP’s volumes. MoM tells a different story with most Gas commodities seeing double figure growth vs. Dec-16. The only Gas commodities to see a MoM decline were NCG and ZEE, down 8% and 4% respectively vs. Dec-16.
Emissions saw a significant change in dynamics as broker bilateral accounted for 18% market share, that’s up 17% from Dec-16. EUA’s were the main driver of this change posting their highest broker cleared market share since Jan-11. Exchange executed also a MoM increase in market share resulting in broker cleared losing 26% market share vs. Dec-16.
Coal was an interesting story in 2016, with both prices and volumes rising, the dominance of broker cleared market share was eroded. Broker cleared volume for 2016 decreased 6.7% vs. 2015, while both exchange executed and broker bilateral volumes growing exponentially resulting in 2016 broker bilateral closing the year off at 7% of total volume. With the first month of the year down, this looks to be the new norm as broker bilateral and exchange executed accounted for 10% and 17% of January’s volume respectively.
This month we are proposing a methodology change to the way in which we calculate ICE volumes. As per our methodology document, we have included an impact analysis highlighting the details of the proposed change as well as the affect it will have on the report if implemented. The change will be implemented from next month’s report subject to user feedback.
High Level Market Summary
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