S&P has highlighted in its recent webinar that the European TTF price has historically traded within a range but that recent gas pricing dynamics has seen it break out of this range.
TTF has historically been bound by the JKM price as a ceiling (spot LNG price in Asia) and the coal switching price as a floor.
- In a tight gas market, TTF traded closer to the JKM price to incentivise LNG supplies into Europe
- In a loose gas market, TTF traded closer to the coal switching price to incentivise more take uptake of LNG by the European power sector
However in H1 2019, there was a big collapse in both the JKM and TTF price. In fact, there has been a period when JKM fell faster than TTF, making it lose its traditional role as a price ceiling and trading below TTF for a brief period.
