Carbon Weekly Newsletter

This newsletter was published 25.5.2022 at 16:07pm CEST

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

News driven volatility has caused some bigger up and down swings in the past week, with price mostly being in range between 78 and 82 EUR. Emission allowances are currently affected by mixed fundamentals, both long and short term, which makes it difficult to determine whether price will stay in a range, trend down or up. Market is still under impression of suggested additional EUAs sales from MSR in the coming years and therefore tends to react sharply to any new piece of information, regardless of credibility. Lately it was reported that MRS sales may not take place in 2022 and that they would be carried out in linearly throughout the next four years, starting with 2023.  That means roughly 63 million more allowances would be offered annually on primary auctions between 2023 and 2027. This could provide some upside risk, especially since additional supply could curb some of the gains, projected even by regulators. Nevertheless, market recognised the news as short-term bullish catalyst and EUAs sharply rebounded from the weekly lows at around 78 EUR and traded as high as 82.66 EUR on Tuesday. Another factor that could be contributing to higher prices and increased demand for EUAs is lack of auctions – them being scheduled on only two out of the next eight trading days. Daily trading volumes in the past week have been modest, however activity picked up on a few occasions, mostly when news about potential EU ETS changes have been released. Other markets in European energy complex have been uncorrelated to each other, suggesting lack of clear directional bias.

German power prices are up down 1.70 EUR since last week, with the front year contract trading at 227.80 EUR/MWh. API2 coal prices are down by 29.20 USD since last week, with the Cal23 contract trading at 223.00 USD/tonne. EUR/USD is up by 160 points since last week and is currently trading at 1.0670.

Price development of EUA Dec2022 futures contract

 

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