Trayport Euro Commodities Market Dynamics Report Trayport Analysis Team March 2015
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Editorial summary March 2015 Euro Gas Growth continues; Euro Power exchange competition; and NBP heads back to the brokers March saw the continued growth of the Euro Gas commodity grouping, with volumes up 34% YTD 2015 vs. YTD 2014. The Euro Gas commodity grouping includes the TTF, NCG, Gaspool, PEG and PSV commodities. All included commodities except Gaspool have seen YTD 2015 vs. YTD 2014 volume growth, as shown by the table below. Four out of six of the commodities recorded their highest monthly volume in March, while NCG and Gaspool recorded their highest monthly volume in February and January respectively. Commodity YTD 2014 Volume YTD 2015 Volume Highest Monthly Highest Monthly % Change (TWh) (TWh) Volume (TWh) Volume Month TTF 3,517 4,996 +42% 1,789 March 2015 NCG 504 514 +2% 185 February 2015 Gaspool 293 290 1% 137 January 2015 PSV 146 179 +23% 77 March 2015 PEG 106 159 +50% 63 March 2015 This continued growth in Euro Gas commodities now renders it the largest commodity grouping in the Euro Commodity markets, with 38% of total monthly contracts traded YTD 2015. NBP, the largest commodity YTD 2014, now has 32%, down 1% vs. YTD 2014. The Dutch hub TTF is nipping at the heels of NBP for single largest commodity and significant gas hub, at 82% of NBP volumes in March 2015, and 79% YTD 2015 (up 18% vs. YTD 2014). Alongside this growth in volume we are seeing an increase in the cleared market and exchanges competing for volume. The cleared market has grown to 16% of total volumes YTD 2015, double the 8% YTD 2014. CME and PEGAS have both been active in launching new contracts this year, with CME adding TTF, NCG, Gaspool and PSV contracts during January, and PEGAS launching PSV futures this month. Another area of intense exchange competition is Euro Power. EEX solidified their position in continental power contracts through 2014, increasing their offering with Italian Power futures and Spanish Power trade registration. ICE have launched both German and Italian Power futures via the ICE Endex platform but are yet to see volume. Nasdaq continues to compete in German Power, with 8% of the cleared market YTD 2015, up 5% vs. YTD 2014. While the cleared market has increased, the brokers have not suffered, with YTD 2015 volumes of 1,580 TWh are still up vs. YTD 2014 s 1,498 TWh. We saw the NBP market shift back to the brokers during March, with broker bilateral market share growing 4% to 45%, at the expense of exchange executions. NBP saw another high volume month, up 3% vs. Feb 15, resulting in a new second highest monthly volume for NBP since our records began. YTD volumes are up 10% vs. YTD 2014. CME launched NBP futures trading in January, while PEGAS additionally launched NBP spot contract trading this month, with 7 GWh traded. High Level Market Summary UK Power saw a drop in volume of 7% MoM, yet volumes remain up 9% YTD 2015 vs YTD 2014. Despite small efforts by ICE and Nasdaq it remains a brokered market, with 98% of volume traded executed bilaterally via a broker. Coal market share inched back towards CME this month, gaining 2% total API2 and API4 cleared market share in March. Total volumes in API2 and API4 are up 29% YTD 2015 vs YTD 2014. While emissions volumes are up 12% MoM, they remain the only commodity grouping with YTD 2015 volumes down vs. YTD 2014, by 39%. This grouping is 100% cleared YTD 2015. 1
European Energy Markets Composition: Broker Bilateral, Broker Cleared and Exchange Execution Information as at: 31 March 2015 Estimates based on Trayport analysis and market research Note: Data sources on page 6. Table 1: Key Term Definitions Term Definition Calculation Broker Bilateral Broker Cleared Exchange Execution Total volume executed at a broker and cleared bilaterally, without the involvement of a clearinghouse Total volume executed at a broker and given up for clearing to a clearinghouse Total volume executed directly on exchange and cleared with the relevant clearinghouse (UK & Euro Gas & Power) LEBA published total volume minus aggregated clearinghouse reported broker cleared volume Aggregated clearinghouse reported broker cleared volume Aggregated exchange reported executed volume Cleared Market Total volume cleared at a clearinghouse Broker cleared plus exchange execution Total Execution Total executed volume, at a broker or an Broker bilateral plus broker cleared exchange plus exchange executed Calculation (Coal & Emissions) LEBA published total volume minus LEBA published cleared volume Aggregated clearinghouse reported broker cleared volume Aggregated exchange reported executed volume Broker cleared plus exchange execution Broker bilateral plus broker cleared plus exchange executed NB: Brokered volumes include spot volume while exchange volumes do not. We are currently addressing this. 2
European Energy Markets Composition: YTD Trends Information as at: 31 March 2015 Estimates based on Trayport analysis and market research Table 2: Volume Traded Change Commodity Class MoM YoY YTD Term Definition Emissions +12% 45% 39% Coal 20% +3% +29% MoM Current month volume versus previous month volume (e.g. March 2015 vs. March 2014) UK Gas +3% +9% +10% Euro Power 5% +4% +15% YoY Current month volume versus same month last year volume Euro Gas +5% +41% +34% UK Power 7% +8% +9% YTD Total volume YTD 2015 versus total volume YTD 2014 (e.g., Jan Mar 2015 vs. Jan Mar 2014) Note: Data sources on page 6. NB: Brokered volumes include spot volume while exchange volumes do not. We are currently addressing this. 3
European Energy Markets Composition: Total Euro Commodity Market Volumes Information as at: 31 March 2015 Estimates based on Trayport analysis and market research (Monthly Contract Equivalents* 000 s) Note: Data sources on page 6. *Monthly Contract Equivalents calculated as total volume divided by a standard monthly contract lot size (30 day month): Commodity Class Volume Unit Standard Monthly Contract Lot Monthly Contract Equivalent Calculation Size Emissions Metric tonnes 1,000 tonnes Total volume in metric tonnes divided by 1,000 tonnes Coal Metric tonnes 1,000 tonnes Total volume in metric tonnes divided by 1,000 tonnes UK Gas Therms / MWh 30,000 therms / 879 MWh Total volume in MWh divided by 879 MWh Euro Power MWh 720 MWh Total volume in MWH divided by 720 MWh UK Power MWh 720 MWh Total volume in MWH divided by 720 MWh Euro Gas MWh 720 MWh Total volume in MWH divided by 720 MWh Monthly Contract Equivalents allow us to compare trading volumes across commodity classes that are traded in different volume units. NB: Brokered volumes include spot volume while exchange volumes do not. We are currently addressing this. 4
European Energy Markets Composition: Rebased Price Trends over Time Information as at: 31 March 2015 Estimates based on Trayport analysis and market research All prices are Front Month, except EUAs, which are Front Vintage. Prices rebased 24 Months previous Note: Data sources on page 6. 5
Data Sources OTC brokers data LEBA www.leba.org.uk Exchange data APX ENDEX CME EEX NYMEX ICE N2EX NASDAQ OMX BMEClearing OMIP Data source Jan 2011 Oct 2013, TTF futures data only; source no longer available http://www.cmegroup.com http://www.eex.com/en/download http://www.cmegroup.com www.theice.com www.n2ex.com www.nasdaqomxcommodities.com http://www.meff.es/aspx/derenergia/historicoresumen.aspx?id=ing http://www.omip.pt/downloads/tabid/104/language/en GB/Default.aspx Clearing house data LCH www.lchclearnet.com 6