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This newsletter was published 2.3.2022 at 15:54pm CEST
The current prices on the European carbon market are as follows:
European emission allowances are experiencing extreme volatility, as a direct result of uncertainty related to war between Russia and Ukraine, regulatory risks and potential extended coal phase out. EUA experienced single largest one day drop in absolute terms yesterday, with trading range from 84.43 to 66.00 for December-2022 futures contract. Volume was the highest in 2022 so far, by a fair margin, as almost 70 million allowances were exchanged. Aggressive selling is suspected to be caused by some large investors which led to cascade effect. When market broke 80 EUR level, several stop orders were hit, amplifying sell side pressure. One sided action stopped late in the afternoon, when market rebounded from 66.00 EUR. Today market experienced another sell-off of more than 15 EUR. Price action was similar to yesterday’s and more selling pressure took place. Market reached the lowest point since mid-October, at 55.00 EUR and then recovered in V shape on failed auction. The last time auction failed, was during Covid meltdown, almost exactly two years ago. Markets in European energy complex reacted differently to EUAs, fearing the end of gas imports from the East. Consequently, Rotterdam Coal Cal23 rose by more than 100% in past few days as EU faces extended coal phase-out.
German power prices are up by 9.00 EUR since last week, with the front year contract trading at 165.00 EUR/MWh. API2 coal prices are up by 136.25 USD since last week, with the Cal23 contract trading at 265.00 USD/tonne. EUR/USD is down by 230 points since last week and is currently trading at 1.1100.
Price development of EUA Dec2022 futures contract