This newsletter was published 9.3.2022 at 16:38pm CEST

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

Markets in European energy complex are in distress, with more uncertainty by the week. Even though negotiations of cease fire in Ukraine took place several times, it seems military action might continue. West responded to Russian aggression by imposing economic sanctions, which led to disruption of global supply chains and causing rouble to devalue. Putin recently countered by banning export of products and raw materials outside the Russian Federation until late December. Which exports will be banned is yet unknown, but many are speculating it could include some minerals, maybe even natural gas. The latter experienced parabolic move of 100 percent for front month futures contract in the past week, which affected power markets, crude oil, coal and many other energy commodities. EUAs have been mostly range bound in the meantime, and except from one trading day, volatility has been elevated. Daily trading ranges of more than 10 EUR have been normal, with increased volume as well. For comparison, in 2021 there have been only a few trading days, where 10 EUR daily trading range has been exceeded. Auctions in the past week have been clearing in line with prevailing spot market and they have been mostly well covered. Cover ratios of 2 and above might be showing there is interest in the market, but we must consider carbon has retraced by more than 25 percent from the highs. Current levels of volatility are unprecedented, even exceeding last November when many trading companies and producers faced heavy margin calls. With never seen before prices in many commodities, pressure on many market participants is seriously increased.

German power prices are up by 9.00 EUR since last week, with the front year contract trading at 174.00 EUR/MWh. API2 coal prices are unchanged since last week, with the Cal23 contract trading at 265.00 USD/tonne. EUR/USD is down by 80 points since last week and is currently trading at 1.1020.

Price development of EUA Dec2022 futures contract