Carbon Weekly Newsletter

This newsletter was published 10.3.2021 at 19:30pm CEST

The current prices on the European carbon market are as follows:

EUAs hit record highs. A strong day in energy prices pushed EUAs up to almost 42 EUR/EUA. Optimism continues as more and more analysts join the bullish forecasts. Some are calling for prices above 100 EUR to be reached as early as this year. There are little sellers up here and the higher prices move, the easier it seems to continue further up. Furthermore, it seems that EUA correlation with equities is still strong. European stocks printed new yearly highs this week, while US equities are hovering just below. On the other hand, options activity since last week showed mixed signals. Open interest for calls at 40 EUR strike was down by around 4.5 million EUA, while higher strikes increased, adding around 6.5 million EUA to total open interest. Puts have seen a bigger increase at around 10.5 million EUAs. These numbers alone are not supporting the move higher, however, looking at total open interest the picture is different. Now that we have crossed the big 40 EUR/EUA level which has around 36 million EUAs of open interest, the next target is 45 EUR/EUA with 30 million. The truly important level, however, still lies higher. At 50 EUR/EUA, 50 million EUAs of open interest is held on all maturities on ICE. If the environment stays supportive, the target does not seem that far fetched with all the volume going on around it. There is still some way to go until then, but remember that prices were 10 EUR lower less than 2 months ago. This shows immense strength of the trend that can stay in motion until something material changes.

German power prices are up 3.35 EUR/MWh since last week, with the front year contract trading at 55.50 EUR/MWh. API2 coal prices are unchanged since last week, with the Cal22 contract trading at 69.30 USD/tonne. EUR/USD is down 170 points last week and is currently trading at 1.1900.

Price development of EUA Dec2020 futures contract

Yours sincerely,
Jan Kresnik 
Carbon Trader

 

 

 

 

 

 

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