This newsletter was published 3.1.2024 at 16:23pm CEST

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

In 2023, EUAs had a quite uneventful ride compared to the year before. At the start, EUAs were trading higher with a strong bullish sentiment, causing the market to go up by over 25% in just two months. By late February carbon traded near all-time highs, however three attempts to break the technical structure to the upside were unsuccessful. Price continued trading in a narrow range near the highs for a few weeks, before dropping considerably as prospects of colder weather and gas supply risk decreased. That sharp drop started a big downward trend that lasted the whole year. The market kept making lower highs and lows, with some occasional attempts to squeeze out shorts. Although there was considerable focus on weekly CoT reports, it became evident that the bearish thesis was likely to play out in favour of the bears. Second half of the year revolved mostly around increased auction supply, which alongside weaker demand drove the prices lower. EU’s decision to sell considerable volumes from market stability reserve to fund REPowerEU alongside record net short position by investment funds had vastly bearish implications. Consequently, EUAs concluded the year significantly below the yearly average price and major daily moving averages. The yearly high for December 2023 futures contract was achieved on February 21 at 101.25 EUR, while yearly low at 65.99 EUR on December 14, respectively. EUAs declined by 34.82% in less than a year, which is much less compared to other energy markets in the European energy complex such as gas and power futures for calendar year 2024. Both markets more halved in prices, due to decreased supply risk in the whole complex, overall mild weather through the year and relatively full gas storages. German power futures, which started the year at 214.27 EUR/MWh, experienced a significant drop to slightly above 95 EUR/MWh. Similarly, TTF gas for the calendar year 2024 plummeted by over 40 EUR to 34.28 EUR/MWh. The busiest day for EUAs in 2023 was November 2nd, with a volume of over 43 million tonnes, which is 2.05 times more than yearly average of 21.1 million tonnes for the December 2023 futures contract (excluding block trades and spreads). EEX reported a total auction volume of 517,587,000 EUAs for 2023. Looking forward to this year, a substantial increase is anticipated, with the expected total auction volume projected to reach 677,274,000 EUAs, according to EEX calendar.

German power prices are down by 7.31 EUR since last week, with the front year contract trading at 93.45 EUR/MWh. API2 coal prices are up by 0.40 USD since last week, with the Cal-25 contract trading at 95.40 USD/tonne. Front year gas prices are down by 2.808 EUR since last week, with the TTF Cal-25 trading at 34.250 EUR/MWh. EUR/USD is down by 140 points since last week and is currently trading 1.0920.

Price development of EUA Dec2024 futures contract