Carbon Weekly Newsletter

This newsletter was published 17.6.2020 at 18:34pm CEST

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

EUA prices have stayed strong since last week and upwards momentum continues. Prices almost touched the June highs and only news about worsening virus outlook in China stopped them from moving higher. However, the dip did not last long and EUAs were quickly back on their way towards new highs. EUAs have seen quite strong correlation with equity market on some days and this was also the case this week with big moves on equity markets being mirrored in EUAs. Whatever negative news moves the market down, dip buyers quickly step in and bid up the prices. Buying interest is also evident in auctions where prices have often cleared above the secondary market price at the time. Even if the fundamentals do not support such high prices, the uptrend is too strong, and, apart from auctions, supply is nowhere to be seen. Meanwhile, European Commission will revisit possibilities of a carbon price floor. This has been debated for some time, but due to many existing mechanisms to support higher EUA prices, it will be very difficult to get members to agree and implement across all countries. Additionally, 2030 emission reduction targets are to be reconsidered as well. If the targets are to be increased, this could lift EUA prices in the long run.

German power prices are unchanged since last week, with the front year contract trading at 38.50 EUR/MWh. API2 coal prices have are down 0.50 USD/tonne since last week, with the Cal21 contract trading at 53.95 USD/tonne. EUR/USD is down by 160 points since last week and is currently trading at 1.1220.

Price development of EUA Dec2020 futures contract
Yours sincerely,
Jan Kresnik 
Carbon Trader

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