This newsletter was published 18.3.2021 at 21:06pm CEST

EUAs are on a streak of records. Prices made new record highs on 5 consecutive days since Monday last week. Quarterly option expiry, that took place today, ended up at the highest level of all times and so did the daily close. There seems to be nothing that can stop the rise. Money consistently keeps flowing into options as well but data shows that participants have started to buy protective puts on the move up since last week. Sentiment from other markets is still bullish and is adding to the optimism on EUAs. It is hard to see factors that would turn this strong trend around. With 6 weeks to go until the compliance deadline, time is slowly running out for companies in need of allowances. All the dips continue to be quickly bought back up. Auctions have seen decent interest and had no problems getting cleared. Even the first EUAA auction of the year, that took place today, cleared without a hiccup now than EUAA will be fully fungible with regular EUAs for compliance purposes. Although all 2021 auctions are for Phase 4 allowances, which can only be submitted for compliance purposes in the next year, the negative interest rates make any carry that could be gained by holding these allowances a very desirable option.

German power prices are up 1.10 EUR/MWh since last week, with the front year contract trading at 56.60 EUR/MWh. API2 coal prices are up 2 USD/tonne since last week, with the Cal22 contract trading at 71.25 USD/tonne. EUR/USD is unchanged since last week and is currently trading at 1.1900.

Price development of EUA Dec2020 futures contract