Carbon Weekly Newsletter

This newsletter was published 30.6.2021 at 6:07pm CEST

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

 

A week after June option expiry, carbon prices breached 56 EUR level. It might have been a bit surprising that the market accepted above the level even after results of UK auction, which has negatively affected price of EUAs on previous occasions. It appears that more than a month of consolidation between 50 and 55 EUR/EUA has formed a bullish setup that may likely break out to the upside and perhaps even surpass all time high at 56.90 EUR/EUA. This week none of the auctions offered a substantial discount below market prices, which can be interpreted as a sign of strong demand. The reasons behind persistent rally could be attributed to energy commodities which have experienced a rise in market value in the past and recent week, most likely due to increased electricity consumption. Another fundamental reason behind price rise could be the news from Brussels as The European Commission adopted free allocation tables for the period 2021-25, which have been previously published earlier in the year. Some of the countries in EU ETS had published their free allocation tables even before the official decision of the Commission has been released, with aim to start distributing free EUAs by the end on next month. As warmer weather and uptrend in energy commodities continue, the price of carbon allowances may likely follow.

German power prices are up by 3.50EUR since last week, with the front year contract trading at 72.60 EUR/MWh. API2 coal prices are up by 2.75 USD since last week, with the Cal22 contract trading at 87.50 USD/tonne. EUR/USD is down by 110 points since last week and is currently trading at 1.1855.

Price development of EUA Dec2021 futures contract

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