This newsletter was published 8.11.2023 at 20:49pm CEST

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

EUA prices have steadily declined towards 75 EUR, reaching their annual lows. This decline mirrors the poor performance of both the power and gas sectors throughout the year. The rationale for higher prices is difficult to identify, a sentiment reflected in the most recent Commitment of Traders data. Investment funds have accumulated a historically high net short position of approximately 30 million EUAs. The trend of increasing bearishness in prices has been apparent since mid-October. While the substantial short position may serve as a limiting factor for further price decreases, any reversal would necessitate a significant change in market fundamentals. The European Union’s gas storage has reached record highs, with numerous LNG shipments en route, thereby capping any potential gas price spikes. In Germany, industrial production has contracted for a fourth consecutive month, resulting in a rather bleak outlook for power prices. As long as these factors remain influential, the prospects for reversing the downward trend of EUAs appear minimal.

German power prices are down by 3.06 EUR since last week, with the front year contract trading at 112.59 EUR/MWh. API2 coal prices are down by 8.75 USD since last week, with the Cal-24 contract trading at 110.75 USD/tonne. Front year gas prices are down by 1.376 EUR since last week, with the TTF Cal-24 trading at 47.124 EUR/MWh. EUR/USD is up by 130 points since last week and is currently trading 1.0700.

Price development of EUA Dec2023 futures contract