Carbon Weekly Newsletter

This newsletter was published 6.3.2024 at 17:16pm CEST

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

EUAs surged back to 60 EUR mark after nearly a month, accompanied by robust buying activity throughout Tuesday after a very strong auction. The auction cleared approximately 1.10 EUR above prevailing spot prices, marking it the largest premium observed in 2024 for EU auctions. Strong bullish momentum continued afterwards and the following day as well. The upward momentum of EUAs was driven by one-sided buying which propelled the market to local high at 62.80 EUR per EUA for December 2024 futures contract. Simultaneously, benchmark German power for 2025 held steadily above 80 EUR per MWh, a strong psychological level. This bullish sentiment extended to TTF markets as well. Some analysts attribute this surge to the developments from earlier this week including reports that there could be some gas production cut in the US, as well as discovered corrosion in a French nuclear power plant. Those events might have triggered some fear among market traders and triggered some short covering. Participants in those markets, especially producers and financial institutions had mostly held short exposure, making those markets more sensitive to potential squeezes. With an upcoming option expiry in only two weeks additional volatility should be expected. The 65 EUR strike has been gaining quite interest and currently holds just over 12 million EUAs of open interest, followed by 80 EUR strike, which has just over 11 million EUAs of open interest.

German power prices are up by 3.20 EUR since last week, with the front year contract trading at 79.70 EUR/MWh. API2 coal prices are up by 7.50 USD since last week, with the Cal-25 contract trading at 111.00 USD/tonne. Front year gas prices are up by 0.800 EUR since last week, with the TTF Cal-25 trading at 30.800 EUR/MWh. EUR/USD is up by 60 points since last week and is currently trading 1.0900.

Price development of EUA Dec2024 futures contract

 

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