Biggest market correction in history

Following the record daily jump in forward prices 16 business days ago, the market had the biggest single day downward correction.


The Big Fall

Yesterday on Monday 31 October, the forward price for the next 3 calendar years of 2023, 2024 and 2025 across the main regions of Queensland, New South Wales and Victoria had the largest daily fall in history, for 7 of the possible 9 cases. In a single day:

  1. Cal-23 fell by almost $21/MWh in QLD, followed by NSW with $18/MWh and Victoria $16/MWh
  2. Cal-24 followed suit with prices falling between $14.50/MWh for NSW and Victoria by $10.88/MWh
  3. Cal-25 fell by $12.70/MWh in NSW and $10.00/MWh in QLD

The daily forward price movements are tabulated below:

Prices expressed in $/MWh for a base calendar year contract


These volatile daily price movements cause significant margin calls which is a concern for many market players as it drives up the capital required to operate. There is nothing better than a favourable market movement, but it is difficult to always be on the right side of all material movements.


The Big Decline

Since 10 October when the market had the biggest daily increase in history which triggered our article Market players are poking the bear, the forward prices have taken a record breaking decline by:

  1. about $50.00/MWh for Cal-23
  2. between $20/MWh (NSW) and $33.00 (VIC) for Cal-24, and finally
  3. Cal-25 had a price correction of $18.50/MWh (QLD) and $15/MWh (NSW)

The price movements over this 16 business day period are outlined below:

Prices expressed in $/MWh for a base calendar year contract


The closest rival to this price decline was in second half of 2007 as the market emerged from the coincident drought across the east coast of Australia. During this time, Cal-08 and Cal-09 market prices softened by between $8/MWh to $15/MWh, however they do not compare with the magnitude of the decline experienced this month.

For those waiting for the market to soften, they had a good day and perhaps an omen for their pick at the Melbourne Cup today.


This article was originally posted on EnergyByte. Reproduced here with permission.

About our Guest Author

Carl Daley is a co-founder of SavvyPlus and Empower Analytics with over 25 years of experience in energy market analytics, with key skills in mathematical modelling and risk management.

You can find Carl on LinkedIn here.

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