This newsletter was published 17.1.2024 at 16:50pm CEST

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

With additional pressure from auctions that resumed this Monday after a month of pause, EUAs continue trading in downward fashion. None of them cleared at a premium so far, suggesting there is more potential downside on the table. According to CoT report, Investment funds increased their net short exposure quite significantly week-on-week which attributed to roughly 10 EUR drop that occurred between January 5 and 12, earlier this year. Long-term moving averages confirm bearish thesis as well, with 50-day being well below 200-day and both down sloping. At the moment are EUA prices roughly 40 percent below last year highs and it seems that the market has hard time finding the bottom or level where participants will be willing to absorb significant quantities. Forward looking to EU policies, which have been quite bearish for EUAs so far might have some more bearish influence in the near-term future as well, however multi-year price projections from majority of analysts remain bullish. Moreover, related markets in the European energy complex remain very bearish, as temperatures rarely fall below long-term averages, while renewable power generation represents larger share in power generation mix. Front gas prices, which seem to be affecting EUAs to the largest extent have bearish sentiment due to unusually high fullness of underground storages for this time of year. It seems that only a major fundamental change could stop the market from falling, let alone change the direction.

German power prices are down by 8.14 EUR since last week, with the front year contract trading at 80.20 EUR/MWh. API2 coal prices are down by 2.25 USD since last week, with the Cal-25 contract trading at 101.75 USD/tonne. Front year gas prices are down by 2.750 EUR since last week, with the TTF Cal-25 trading at 31.400 EUR/MWh. EUR/USD is down by 90 points since last week and is currently trading 1.0860.

Price development of EUA Dec2024 futures contract