This newsletter was published 2.8.2023 at 17:18pm CEST

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

EUA December-2023 futures fell to 83.00 EUR per tonne after immense selling pressure took place in the market. Prices have risen to 93.50 EUR in the late July, however just moments after the CoT report had been published, market peaked and sharply reversed. According to the report, many participants got into long position, expecting the rise of EUAs, due to halved auctions in August. Furthermore, long positioning of financial institutions increased even more, according to today’s report in comparison to last week. This might come across as a surprise, especially since prices fell so much already. In addition, EU published proposal of updated EUA auction volumes to fund REPowerEU with 231.37 million allowances, scheduled for auctions between 2024 and 2026. This is more than was anticipated by some analysts and might have amplified the selling pressure. Other markets in European energy complex are trading at a discount in comparison to prices from last week as well, with gas likely being the main driver. Energy prices are significantly lower due to mild summer weather, healthy renewable power production and relatively full gas storages if compared to the same time last year. Consequently, power prices have been trending south, with benchmark German Cal-24 being more than 10 percent down in just a week. Similar to EUAs, UK emission allowances fell significantly as well, having reached lowest price in history. Spot UKAs have traded below 40 GBP per tonne, which is more than 2 GBP below in July 2021 lows, when market last bottomed. It seems that energy supply is currently abundant and only change in fundamentals could send prices running in the opposite direction.

German power prices are down by 10.70 EUR since last week, with the front year contract trading at 133.70 EUR/MWh. API2 coal prices are down by 16.00 USD since last week, with the Cal-24 contract trading at 117.50 USD/tonne. Front year gas prices are down by 3.850 EUR since last week, with the TTF Cal-24 trading at 49.300 EUR/MWh. EUR/USD is down by 140 points since last week and is currently trading 1.0930

Price development of EUA Dec2023 futures contract