Turkey/Bulgaria/Greece: Markets expect further downward corrections
Turkish curve values struggled to achieve a clear direction on Thursday as the nearer-dated contracts were boosted by bullish spot values, while prices further out corrected downwards.
By Friday, average Baseload prices for May were hovering around Turkish Lira (TL) 135.25/MWh, prompting participants to expect the month to deliver at an average TL120.00/MWh, some TL26.00/MWh above last year's median level for the same month.
Between 1.0−1.3GW of coal and natural gas-fired generation and another 325MW of hydro production operated by the state incumbent EÜAŞ are off line until the end of May, according to EÜAŞ data.
Some participants said a number of companies may be underforecasting their capacities, which may be boosting spot levels.
Others dismissed the view, insting that values were simply reflecting higher temperatures and system shortages. A few were less optimistic, insisting that May levels were overpriced and may start to correct downwards.
"Consumption is around 30GWh, which is still some 5GWh below this year's peak in mid January," a source said. "I don't see why May prices should be at the level that they have been so far."
Although there were no firmer elements to explain the high spot prices, participants said bullish delivery May levels were boosting the new front month. Opinion was split between some who thought that June Baseload should be assessed at TL120.00/MWh and those who were taking a more robust view, estimating it TL20.00/MWh higher. ICIS assessed the contract in line with the weighted average price for the June financial product on the TurkDEX platform, which outturned at TL129.76/MWh.
While the front quarter was assessed TL2.00/MWh above last week's values, the winter quarterly products were readjusted to take into consideration a rare market consensus. Most participants polled on Thursday agreed that Q1 '13 Baseload should be priced at TL155.00/MWh. They said the sharp TL9.00/MWh fall on Q1 '13 Baseload was a correction from earlier levels as the market was no longer factoring in their long-term estimates the risk of critical gas shortages that had pushed winter spot prices up earlier this year. At its peak assessment in early April, the product was estimated at TL164.50/MWh, according to ICIS data.
Sources were trying to explain the effects of breaking news that natural gas prices for build-own-operate, build-own-transfer (BOO/BOT) plants had been increased by up to 8%.
The claims could not be officially substantiated, but some sources said that even if the announcement were true, the increase may not have a direct impact on the non-regulated section of the electricity market. Producers which generate under long-term BOO/BOT contracts buy natural gas at fixed prices from the gas incumbent BOTAŞ and sell their generation regulated tariffs to the state-owned wholesale company TETAŞ.
Bulgaria and Greece
Greek and Bulgarian sources were taking a bearish view regarding June Baseload values. In Greece demand dropped by 8% in April and was expected to record similar falls in May. There is no expected maintenance on the Greek interconnectors next month. Bulgarian participants were keeping a watchful eye on a possible increase in the export tariff. Regulator DKER is due to decide by the end of the month whether to increase the renewables component and boost the tariff to €16.00/MWh as required by state-owned utility NEK. AS/IP
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