Over the last few months, the market had a perfect storm of restricted gas supply and low lake levels. The gas issue remains, but storage has now risen so that it is above the long-term average from New Zealand, with South island storage sitting between the 50th and 75th percentiles.
Lake Taupo is still sitting between the 5th and 25th percentiles, but it recovered a whole lot over the month, with four week running average inflows finally returning to average - at last 1.
No one who knows anything about hydro inflows in New Zealand would try predicting them more than a couple of weeks out, but currently storage is looking quite healthy, and from now on we expect demand to start falling, with snow melt kicking in from August and spring nor westers ramping up. So that all takes a lot of pressure off the market for the time being.
There's nothing new to report on the gas supply situation.
But back to the contracts market (large FPVV and CFDs) it now looks likely that all three indexes will fall next month. Purchasers who didn't contract before prices hiked, but were able to hold off until now, have avoided the worst of the big prices, but others have no doubt locked the really high prices in for a year or more.
It needs to be repeated that there is a lot of new renewable generation coming over the next few years, and if Tiwai does indeed, finally, possibly, maybe, might, might not, close down, then there will downward pressure on spot prices.
Download the full file on the Contract Indexes for July below.