Italian PSV volumes improve but still low; peak so far at 56.3 Mm3 in May
Traded volumes on Italy’s new Punto di Scambio Virtuale (PSV) market are on a general trend upwards, but have not increased steadily since last December, according to latest data from operator Snam Rete Gas (see graphs below). Although volumes have stayed above the levels of the first two months of operation, October and November 2003, volumes have been wavering in a range of 32.0-56.3 million cubic metres (Mm3). Data for May so far (up to 24th) shows it to be the most actively traded month at 56.3 Mm3
Some market sources believe that this is the start of a more pronounced upwards trend in volumes, but some think the increase will come from long-term agreements being conducted on the PSV rather than spot trading. Several Summer deals have already been transacted via the PSV, particularly as traders have been able to buy TENP pipeline capacity for this period at the ENI auctions. Although the PSV system only allows bookings for 15 days ahead, traders say they have been finding it easy to do a deal bilaterally for a longer period and just keep renominating volumes every 15 days. Although no deals for longer than the summer have been reported, traders say there is increasing interest in showing prices for periods of up to a year. “This is the beginning of a move towards having a place with a price that is easy to understand,” one trader commented. Any price indications at the PSV avoid the issue of changing entry capacity prices and maintenance outages at entry points. However, some shippers commented that the advantage was all to the buyer, as the seller would take all the entry capacity and interruption risk.
The pattern of trading has also changed in May as volume is distributed more equally between working days and weekends. During the colder weather, there was more interest in exchanging weekend gas as industrial users would have spare volumes that were needed by companies with residential demand. Residential demand has fallen in May on warmer weather however and much of the demand has come from storage injection instead. Longer-term deals with more consistent delivery volumes may also be levelling out the trading pattern.
The number of trades has been on a more pronounced upwards trend since February. The highest number so far was recorded in March, when 653 transactions took place. Demand was particularly high for extra balancing gas in this month as many companies had come to the end of their storage reserves.
However, the PSV is still a very new market and is still primarily being used for marginal, balancing quantities. To put the volumes in perspective, 42.2 billion cubic metres (Gm3) of gas were traded at the NBP in April. PSV trade in this month only amounted to 0.1% of this at 36.5 Mm3.
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