Carbon Weekly Newsletter

This newsletter was published 20.9.2023 at 16:24pm CEST

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

Quarterly option expiry for EUAs once again offered no surprises and settlement ended calmly. There were many attempts in the past days to push market to the largest strike for September expiry at 80 EUR, however market found too much support and bottomed at 80.50 per tonne. Mid-term fundamentals for EUA remain bearish, which might be also confirmed by lack of aggressive buying today when CoT report was published. Investment funds increased net short position to nearly 22 million tonnes, which is the second largest net short position since 2019. Related markets, especially German power futures for calendar year 2024, also showed some signs of weakness in the past week. Price has been rejected from 130 EUR for MWh and it seems to be approaching 125 EUR as a next rounded level. Despite bearish sentiment and downward pressure seen in carbon and German power futures for 2024, front month gas and front month power prices started to trend to the upside recently, which might appear unusual. Extended outage of Norwegian pipeline has caused panic buying and pushed front month prices up a few euros, however underground storages are more than 94 percent full and weather forecast remains mild. At the moment it seems that EUAs are happy to trade between 80 and 85 EUR per tonne, however a major change in fundamentals could send prices in either direction.

German power prices are down by 2.75 EUR since last week, with the front year contract trading at 125.75 EUR/MWh. API2 coal prices are up by 2.00 USD since last week, with the Cal-24 contract trading at 130.00 USD/tonne. Front year gas prices are down by 1.800 EUR since last week, with the TTF Cal-24 trading at 50.050 EUR/MWh. EUR/USD is down by 20 points since last week and is currently trading 1.0720.

Price development of EUA Dec2023 futures contract


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