Carbon Weekly Newsletter

This newsletter was published 3.3.2021 at 19:36pm CEST

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

EUA prices are consolidating near the highs. Ever since early February, prices have ranged between 35 and 40 EUR/EUA. 50- and 200-day moving averages are still upward sloping. Price-only analysis suggests that EUAs have further upside potential after the range resolves. With compliance deadline slowly approaching, companies that have stayed on the sidelines waiting for a bigger correction might be forced to buy at the high prices in the next weeks. This could create enough buying pressure to move the market above 40 EUR/EUA. There has been less option activity in the past week compared to usual. There was, however, an interesting development in the Dec21 expiry where around 12 million EUA were added to the open interest at a strike price of 100 EUR. If we exclude that strike, open interest increased equally, adding around 7.5 million EUAs of open interest on each side, calls and puts on all maturities and all strikes. UK announced that it will start auctioning allowances that will be used for country’s own emissions trading scheme. First auction is scheduled to take place on May 19 and will take place every two weeks, selling around 83 million allowances in total. Floor will be set at 22 GBP but market price will be determined based on demand and secondary market will also be established for a continuous price reference.

German power prices are almost unchanged since last week, with the front year contract trading at 52.15 EUR/MWh. API2 coal prices are up 5.25 USD since last week, with the Cal22 contract trading at 69.25 USD/tonne. EUR/USD is up 40 points last week and is currently trading at 1.2070.

Price development of EUA Dec2020 futures contract

Yours sincerely,
Jan Kresnik 
Carbon Trader


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