This newsletter was published 21.08.2024 at 16:54pm CEST

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

Carbon prices have remained firmly above 70 EUR for quite some time now, driven by persistent buying activity in the weeks before September. The buying surge is likely fuelled by utilities hedging coal power generation due to increased energy consumption, as well as by investment funds. These funds have been consistently reducing their net short positions over the past several weeks, covering more than 14 million tonnes. Moreover, the CoT report suggests that several long positions have been added in the last two weeks, which could explain the recent strength in the market. Interestingly, net shorts decreased by over 8 million tonnes week-on-week, even as the market gained only 2.5 EUR. Although September has been historically a bullish month, late compliance buying could provide some additional support. On the other hand, adjusted auctions set for September could significantly subdue the accumulation of EUAs. Looking at the option chain for the next quarterly expiry, the ratio between call and put options has shifted in favour of calls, unlike the last two expiries. A call to put ratio of 1.4 suggests more buying than selling interest, despite the potential bearishness the market might face. The largest call strike is at 75 EUR, with 13.76 million EUAs of open interest, while the largest strike on the put side remains at 60 EUR, with nearly 14 million EUAs of open interest.

German power prices are down by 4.08 EUR since last week, with the front-year contract trading at 95.07 EUR/MWh. API2 coal prices are down by 4.75 USD since last week, with the Cal-25 contract trading at 125.00 USD/tonne. Front-year gas prices are up by 1.930 EUR since last week, with the TTF Cal-25 trading at 40.000 EUR/MWh. EUR/USD is up by 80 points since last week and is currently trading at 1.1100.

Price development of EUA Dec2024 futures contract