Carbon Weekly Newsletter

This newsletter was published 19.5.2021 at 5:10pm CEST

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

After a strong multiweek rally, prices of EUAs consolidated on Monday and heavily sold off on Tuesday and Wednesday. The market gave back last week’s gains in only two trading days and transacted below 49 EUR/EUA. Many speculate that selling was caused by considerable amount of supply, especially fresh auction supply under UK ETS which started on Wednesday. UK ETS was designed similarly as EU ETS, however allowances are not transferable between the markets. The UK government set a floor for auction prices at 22 GBP in contrast to EU ETS. This year there will be 83 million allowances sold on auctions in UK, which will be held every two weeks. Auctions in EU ETS are held every day this week and more than 15 million allowances offered will likely have an impact on EUAs prices. Energy commodities were also hit by strong selling activity in futures and spot markets, especially UK natural gas which saw more than 15% drop from the high. Sentiment in all major global markets has shifted during the start of this week as almost all asset classes declined in value. Many investors are in risk-off mode as a result of last week’s higher than expected inflation numbers. If this market sentiment prevails, we might see larger scale retracement to longer term average prices, including EUAs.

German power prices are down 0.85 EUR/MWh since last week, with the front year contract trading at 60.00 EUR/MWh. API2 coal prices are unchanged since last week, with the Cal22 contract trading at 77.10 USD/tonne. EUR/USD is up 220 points since last week and is currently trading at 1.2220.

Price development of EUA Dec2020 futures contract

 

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