Carbon Weekly Newsletter

This newsletter was published 24.8.2022 at 16:28pm CEST

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

Bullish pressure that was prevailing in the market for the better part of August abruptly ended and caused EUAs to revert 10 EUR in only two trading days. Despite continuous upward trend in power, gas and coal, EUAs experienced relatively smaller surge in prices. There are many reasons why that happened, but the main might be recession expectations in Europe as France experienced contraction of economic activity. Resumed full size auctions in September and uncertainty about gas flows also do not support higher prices. Upcoming 3-day maintenance of Nord Stream 1 could result in even higher short-term gas prices, which would be additional distress for economy. Many companies have already reduced their energy consumption by 8 to 10 percent, but it is estimated that additional cuts of 20 percent would be needed, according to senior German official. The real question remains how much room industrials have left, since many are already operating very efficiently in energy terms. Only positive thing about gas are EU underground gas storages which are around 78 percent full, which is roughly the same as in August last year. Reduced daily auctions have been well covered most of the time and cleared above prevailing spot prices. The only exception was yesterday when auction offered a discount of 55 cents. Market interpreted this as a bearish sign and prices fell by more than 4 EUR after the result and might be continuing to trade lower.

German power prices are up by 127.00 EUR since last week, with the front year contract trading at 640.00 EUR/MWh. API2 coal prices are up by 9.00 USD since last week, with the Cal23 contract trading at 308.00 USD/tonne. EUR/USD is down by 240 points since last week and is currently trading 0.9910.

Price development of EUA Dec2022 futures contract

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