Recapping 2025, market sentiment shifted downward with falling Cal-26 and Q1-26 forward prices. Trading activity increased from 2024 levels, although was less than previous years. Swaps have become less popular while Options and Caps grew. Put Options increased rapidly in some Regions.
1.0 Highlights
The market sentiment significantly changed with a softer outlook permeating through the trading activity. Cal-26 forward prices softened, Q1-26 in particular dramatically softened setting record falls, while Average Rate Put Options became more popular in NSW and VIC reflecting concern about potential soft spot prices.
The four-year forward market outlook predicts continued softening for NSW and a relatively flat trajectory for QLD, alongside a rising outlook for SA and VIC.
When the actual Q4-25 spot prices were measured against our probabilistic spot forecast, the general conclusion is that spot prices were much softer than expected for Q4-25. VIC was the exception which finished very close to our expected outcome for the quarter.
For Cal-25, the actual spot prices for QLD finished in the bottom quartile of our probabilistic spot forecast, NSW was below our median, while VIC and SA tracked near our median and therefore tracked as expected. TAS finished in our top quartile for the year, much stronger than expected.
When the forward prices for Q4-25 and Cal-25 were measured before the commencement of these periods against the actual spot prices, our spot forecast performed better. If simple trading strategies were set in place from these evaluations, significant trading gains would have been achieved.
ASX trading activity increased in 2025 by 12.5% measured in traded quarterly Lots (MW), largely driven by growth in NSW and QLD. There was a notable shift away from Swaps towards Average Rate Options and Caps compared to previous years. Average Rate Put Options grew in popularity in NSW and VIC as the interest to protect against soft spot prices increased. Transaction sizes for Swaps and Caps have become smaller over the years.
