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CEE/SEE: Electricity curves steady as Czech backwardation rules

13 Apr 2012 21:50:04 | edem

Regional electricity curves held their ground on Friday as Polish and Czech curves ended the week flat session on session.

Traders remarked on the recent stability of the Polish front-year Baseload contract, which closed at Zl211.50/MWh. One trader expected Cal '13 Baseload to remain stable for the time being. "I think Cal '13 will stay on the Zl211.50/MWh to the Zl212.00/MWh level until the end of the month," he said.

The Czech curve was again in backwardation, with Cal '13 Baseload flirting with €49.80/MWh before returning to close at €49.70/MWh. Czech traders were at a loss to explain the backwardation given the German curve's shape. One predicted that the curve would return to contango next week.

Hungarian traders were unconvinced of the influence on their market of the Czech backwardation, with one questioning the idea of further economic woes ahead for Calendar '14 Baseload. Instead, he suggested that Hungary's Cal '13 Baseload was overpriced. "I don't expect us to come out of recession next year only to go back into it in 2014," he said.

The Hungarian front month ticked lower early in the session but was then offered higher until the close. While some sources continued to consider the additional rainfall into next month a bearish factor, others pointed to a heavy maintenance schedule during April and May. Traders suspected that profit-taking on Hungary's premium to Germany had put downward pressure on prices.

Sources considered the May '12 Extended Peaks trading level of €65.00/MWh a fair price at which to assess the Peaks contract, as traders commented that the Extended Peaks profile was becoming more popular than the standard Peaks between hours 8 and 20. Four clips changed hands at that level during Friday's session, although the Hungarian May '12 Peaks contract has yet to trade.

"Hours 21 and 22 are usually higher than hour 20, and hours 7 and 8 are also very valuable," one source said. "Most of the traders buy Peak long-term contracts to hedge their customers, but it seems the growth in consumption is starting an hour earlier."

The extra liquidity led to a higher revaluation for the monthly Peaks contracts.

Besides the Cal '13 Baseload, May '12 Baseload was the only contract to change hands on the Polish market, closing at Zl183.80/MWh in a quiet session, Zl0.20/MWh lower day on day.

However, one Polish participant maintained a bullish outlook for the May product and said he expected it to rise in response to stronger spot prices. He predicted that the spot would be lifted by import capacity from Germany hitting 1GW next week.

Public holidays in the Romanian and Serbian markets curtailed transactions, but participants reported trading for Monday delivery at around €45.00/MWh. Romanian bid levels for near-curve contracts receded in the midst of low liquidity, although the Q3 '12 Baseload was bid at the same level as the June contract, leading ICIS to assess it higher day on day. KB/ZD

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