Czech Energy Pricing Trends - 17 Oct. 2021

CO2 price (Dec-21) increased by 1,11 EUR/t WoW to level 59,44 EUR/t WoW. CO2 price returned below 60 level last week and since then holds this territory. Brent price (Dec21) increased by 2,47 USD/bbl WoW to 84,86 USD/bbl and is close to multiyear highs.  Coal API (Nov21) increased by 22,25 USD/t WoW to 227,25 USD/t. After dramatic fall from all-time-highs last week, coal rebounded up this week. The whole energy mix reacted strongly last Wednesday to a statement by Vladimir Putin who asserted that Russia will ensure Europe is well supplied on natural gas this winter.

The gas reacted immediately with electricity and coal following. Brent price was affected marginally. Coal market remains very tight as well, weather issues in India and China caused some coal mines to be shut down - further exacerbating problems with coal inventories in these countries. On top risk of floods in Australia may cause another coal supply issues in coming months. Electricity market will therefore remain elevated due to gas as well as coal market will remain tight in coming months. High prices mean also credit issues for some traders and suppliers.

Some suppliers (both in Czech and Slovakia) have already filled for bankruptcy (or stopped its operation) leaving their customers to buy electricity and gas for current elevated prices. This means increased energy demand by remaining suppliers to cover supply for these customers. Some bankruptcies in Czech Republic will not affect the whole European energy market, however bankruptcy of some large European supplier/trader could shake the energy market significantly.

Slovak power market followed the trend of Czech market with the same big volatility.

Slovenian market followed trend on other European electricity markets.

SPOT prices rose significantly last week close to 120 EUR/MWh level, but later corrected following Mr. Putin´s statement.

This week prices started to grow again and on Thursday price exceeded 100 EUR/MWh, however on Friday price eased a bit again.

Gas market experienced extreme bullish trend last week and prices spiked on last week´s Wednesday morning to new historical maximums. After the statement by Vladimir Putin who asserted that Russia will ensure Europe is well supplied on natural gas this winter, the prices fell down significantly within minutes.  The Russian president’s words were enough to force power, gas and coal prices significantly lower, without any meaningful change in the underlying fundamentals.  It indicates that much of the recent upswing in prices was driven primarily by panic and speculation.

The market now awaits November capacity auction if Mr. Putin´s words are to be fulfilled. Current gas flows via Mallnow (Poland) are, however, below October booked capacities (by Gazprom) indicating that Gazprom either does not have enough available gas now or it will continue to push Europe for fast Nord Stream II certification. Current level of gas filling in European storages (77% as of Friday) continues to be at mutli-year low; however, net injection continued until Tuesday and turned into net withdrawal just from Wednesday. The volatility will remain huge in current tight gas energy market and price will probably significantly react to results of November´s capacity auction.

The information above is an excerpt from the applicable report referenced above. For a full and complete copy of this report please complete the form below, sign up for our newsletters or schedule a virtual meeting at your convenience.

Miroslav Ceman

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