CEE/SEE: Prices look beyond Germany for direction
Curve values across the region were subdued on Friday, but most traders described the bearish sentiment as "the usual quiet before the storm".
With Calendar Year 2012 Baseload trading at €49.10/MWh, €0.10/MWh shy of the monthly low recorded on 24 January in the Czech Republic, traders said the curve was looking for direction from the coal and financial markets.
"The contract has been probing the bottom really, now it's time to go back up. The question is, will it do so? Germany is also losing ground, so the only bullish signals could come from coal and the financial markets. However, I think that what we're seeing now is just the usual quiet before the storm," a source active on the Czech market said.
The sentiment was echoed by Polish traders who pointed out that the equivalent contract had lost Zl0.15/MWh intra-day, taking the cue from the German Cal '12 Baseload product.
"Participants are waiting to see how coal prices evolve over the next week. However, it is unlikely that producers in Poland will sell below the Zl199/MWh level," a source said.
He pointed out that there have been few auctions held on Polish power exchange PolPX since the beginning of the year. "The regulator has indicated that it would not approve auctions organised by producers to prevent selling within vertically integrated companies," he added.
The Hungarian Cal '12 Baseload contract sustained a €0.25/MWh loss, which was mainly a product of revised expectations about the constituent Q1 '12 contract. The Q1 '12 was assessed to have made a €0.45/MWh loss. Hungarian participants said that unusual spreads were developing on quarterly Baseload contracts, with Hungary retaining a €0.30/MWh premium to Germany on the Q3 '11 product. The Hungarian contracts sandwiching the Q3 '11 have large discounts to the equivalent German products, with a €1.20/MWh discount on the Q2 '11 product and a €1.80/MWh discount on the Q4 '11.
"I suspect there's a utility somewhere in there who's doing some aggressive buying. There's no reason that the spreads should be so uneven between the quarters," said one trader. A second agreed, saying that the phenomenon was a "discrepancy".
One deal was concluded on the Romanian market, with a clip of New Lei 161/MWh changing hands on the Q2 Baseload contract. One trader said that markets were quiet as most counterparties had closed their positions on Thursday. Bid/offer spreads on longer-dated contracts in the country were assessed to be slightly higher session on session. "The spot's still very high in Romania, which is driving movements further out," said one participant.
No deals were concluded on the Serbian market, with one participant saying that he was looking to Hungary for a sense of direction.
Closer in, traders on the Czech and Polish markets were still expecting developments on the front month Baseload contract, despite the fact that it has one day left before delivery.
Polish traders said there was a "healthy situation in the system, which should continue into the next month".
A similar picture was reported in the Czech Republic, where one 500MW coal-fired plant that had gone off line for a day and a half earlier in the week had been switched back on. AS/CN
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