| Spectacular price differences could stay on HUPX – trader |
| 2010-08-25 |
| Price variations on the Hungarian Day-ahead exchange HUPX are caused by a lack of correlation with over-the-counter values, market observers said on Wednesday (25th August). Since Friday, the values of contracts with Day-ahead delivery on the power platform followed an erratic path, bobbing above and below the OTC market. Price differences between regulated and non-regulated trading floors ranged between €4.03/MWh and €6.18/MWh on the Day-ahead Baseload contracts with Monday and Tuesday deliveries. Meanwhile, differences between Peakload contracts with similar delivery varied between €18.06/MWh and €4.13/MWh. On Tuesday, however, traders were faced with an entirely different picture as the HUPX Baseload and Peaks contracts for Wednesday delivery dropped €8.40/MWh and €12.09/MWh respectively below the OTC market. On Wednesday, they regained their foothold as contracts with Thursday delivery on HUPX traded almost on a par with OTC values. However, one market participant said the high level of volatility on the Hungarian bourse is likely to continue as long as there is a combination of low liquidity and a lack of correlation with the OTC market. While price differences between brokers are minor, price differences between brokers and HUPX can be spectacular, the source said. Hungarian traders reported spikes on the OTC market earlier in the week, suggesting that the rally was due to the fact that the available cross-border capacity on the Czech-Hungarian border had been sold off in advance at the monthly auction, leaving no capacity on the spot. This came as a surprise to everyone, one market source said, A pleasant one for those who are long and an unpleasant one for those who are short. On Tuesday, some traders were so short that they even scrambled for lesser-traded contracts such as Day-ahead off-peaks. Last week, Hungarian spot clearing prices for Monday were thrown out of kilter during the Sunday auction when the Day-ahead Baseload contract shot up to €1,147/MWh, with the Peaks reaching €2,262/MWh (see EDEM 16 August 2010). Traders said the values recorded on the local HUPX platform could damage the reliability of Day-ahead indices, as they failed to reflect transaction prices, which usually hover around €40/MWh and €46/MWh for Day-ahead Baseload and Peaks respectively. However, HUPX insists that liquidity on the platform is likely to pick up in the short term as more traders are actively seeking to join the exchange. (THE ICIS HEREN REPORTS - EDEM 14.164 / 25 August 2010) |
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