Carbon Weekly Newsletter

This newsletter was published 21.12.2022 at 16:40pm CEST

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

December 2023 EUA futures contracts traded in a wide range on the first day as the benchmark product. Relatively low trading volumes due to nearing Christmas and New Year holidays could be one of the reasons why price moved so violently to the upside during the trading day. Despite strong gains on Tuesday, EUAs experienced quite big downturn today. This move could have also happened due to poor liquidity, as well as fundamentals, especially warmer weather that was initially forecasted. Same as every year, EUAs entered a period with no auctions. The pause has begun on Monday this week and will last till January 9, 2023, when auctions resume. Lack of primary supply could provide some support for the current prices in the meantime and EUAs could be range bound to bullish in the following weeks. Despite mentioned reasons, many participants in the market will focus on additional news or explanations of preliminary deal regarding RePowerEU, reached last week. Sales of additional allowances might have some bearish long-term implications, especially if combined with below average energy consumption and more power generation from renewables. Milder weather forecast, coupled with gas price cap has severely affected power prices as well. Benchmark German power Cal-2023 fell by almost 40 percent since beginning of December, which is welcoming by households and industry.

German power prices are down by 56.50 EUR since last week, with the front year contract trading at 269.00 EUR/MWh. API2 coal prices are down by 39.00 USD since last week, with the Cal24 contract trading at 188.00 USD/tonne. EUR/USD is down by 30 points since last week and is currently trading 1.0620.

Price development of EUA Dec2023 futures contract

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