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CEE/SEE: Low electricity demand forecasts depress the prompts

30 Mar 2012 21:32:41 | edem

The upcoming Easter holidays were quoted as the main reason for bearish electricity prompt values in the region on Friday, while the far-curves were depressed by lower gas values.

The Polish Calendar Year 2013 Baseload was flat for second consecutive session at Zl211.40/MWh, but some felt that the contract will fall under pressure from a weak spot and emissions.

One Polish source suggested that the upcoming Eastern period will bring further low prices to the spot market, which would put pressure on the front-year contract. Furthermore, with the balance of the year for Cal '12 Baseload much lower than Cal '13 Baseload product, it is likely that the latter will start coming off soon, some said. "I can see the Cal '13 Baseload at below Zl210/MWh," one market participant said.

The Hungarian curved lost ground on Friday after posting strong gains in the previous two sessions. The front-year Baseload product closed €0.40/MWh lower at €57/MWh. Traders said the Cal '13 corrected after an overheated bull run. Despite modest falls along the curve, bullish sentiment remained, with fears about hydro supplies and maintenance outages still front of mind.

Some suggested that the Polish Q2 '12 Peak contract should be delivering lower than at Zl208.50/MWh. "I really can't see it delivering at this level, especially when considering that Sweden will most likely be a net exporter until August," another Polish source said,

Czech market participants also believed that the Q2 '12 contract will deliver lower as most of the maintenance during that period had already been priced in. Strong selling interest on Friday suggested that the suppliers too are seeing more downside to the April and May products. "There was a lot of aggressive selling on the market," one said. "People generally believe that Q2 '12 could deliver €1-2/MWh lower, but it all depends on the second half of April."

The Hungarian April, May, Q2 '12 and Q3 '12 Baseload products all closed lower day on day, but one trader said Q2 '12 and Q3 '12 were still overpriced and could fall further next week.

"Hungary is being priced on a worst-case scenario. But if there is an improvement in hydro levels, the question will then be how much import capacity can be secured," said the trader.

Last-minute April Baseload buying interest was also seen in Romania, but the contract closed flat day on day at New Lei 201/MWh. The threat of shortages in Hungary wrought havoc on the spot price, with Monday's Baseload contract hitting €57.50/MWh before settling back to €51.00/MWh, €3.00/MWh higher session on session.

"The spot price spike was unexpected. It isn't too hot in Hungary, there is low demand and the CHP plants are still working," one Hungarian trader said.

The trader added the Hungarian market would be tested early next week, with 500MW of capacity off line at the Paks nuclear plant and the Slovakian-Hungarian interconnector still lacking 300MW of its usual capacity.

The bulls dominated Serbia's near curve. There was interest in the April '12 Baseload contract on the last trading day prior to delivery. The product traded at €50/MWh, €0.65/MWh higher day on day. SR/KB

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