This newsletter was published 22.7.2020 at 18:26pm CEST

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

EUA prices lost the bullish momentum and dipped to levels from the beginning of the month. Majority of the down move unravelled on Thursday’s afternoon session when prices accelerated to the downside once they crossed the previous support at 28 EUR/EUA. Since then we have seen two more attempts to push the prices lower but market held up quite well so far this week. However, auctions continue to see lower demand from buyers as they clear near the daily lows almost every day. Market appears to be establishing a new trading channel between 26 and 28 EUR/EUA for the coming days as we slowly head in to the last week of normal auction volumes. Starting August, auctions switch to the usual halved volumes for one month. If the market keeps holding up well until then, the decreased supply may result in a further rise of EUA prices. On the other hand, August is usually one of the slowest months and it may very well happen that we continue to trade in a range with a decreased daily volume. On Monday evening news came out that EU has decided on a new deal to help the economy get back on track. 750 billion EUR fund of grants and loans will in part also be allocated to support green projects and to reach emissions reductions objectives. As funds would have to be partly paid back, additional mechanisms are planned to be implemented to EU ETS. Carbon border tax and expansion of industries that fall under EU ETS are one of the changes being discussed at the moment. Still, any changes are still far away with a proposal date set in summer 2021.

German power prices are down 2.20 EUR/MWh since last week, with the front year contract trading at 40.20 EUR/MWh. API2 coal prices are up 0.20 USD/tonne since last week, with the Cal21 contract trading at 60.70 USD/tonne. EUR/USD is up 160 points since last week and is currently trading at 1.1570.

Price development of EUA Dec2020 futures contract

Disclaimer:

In accordance with relevant legislation this communication is provided for informational purposes only and is not considered an investment research, financial analysis or other form of general recommendation relating to transactions in financial instruments. It is not an offer or a solicitation of an offer to buy or to sell any instruments or to participate in any trading strategy.

It is the responsibility of each interested party to make their own enquiries that the information provided is appropriate to their individual circumstances in addition to any legal, regulatory, tax or other implications for themselves or their business. The information is solely for your internal use and may not be issued as the basis of any product or reproduced, redistributed or transmitted in whole or in part in any form or by any means, electronic or mechanical, including photocopying or by any information storage or retrieval system without the prior express written consent of Belektron.