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This newsletter was published 12.1.2022 at 16:34pm CEST
The current prices on the European carbon market are as follows:
EUA auctions resumed on Monday and fresh supply already caused EUAs to sell off strongly. Price of emission allowances dropped by more than 6 percent on that day, as major global equity and energy prices retreated. Although on Monday EUAs already dropped by 3.5 EUR in the morning, auction still offered a substantial discount below secondary market. Second yearly auction, on Tuesday, was cleared in line with prevailing spot prices and with a lot more interest. Cover ratio of 1.62 meant there were a lot of unfilled buy orders, and some participants had to buy right afterwards. Market rallied soon after auction result has been published and peaked at 84.45 EUR. It seems like short to mid-term bullish trend ended and market entered a consolidation phase. Winter has not been as cold as previously anticipated, liquified natural gas is shipped to European ports and the whole energy complex is experiencing lower prices. Additionally, permanent inflation concerns mean that European Central Bank might need to raise interest rates in 2022, similarly to what is expected from Federal Reserve. Increased margin requirements for products in European energy complex could also be causing some selling pressure, until liquidity issues, which are consequence of higher prices, get sorted. Although tight environmental policies support EUAs, it would be unreasonable to expect similar performance in 2022 to last year’s.
German power prices are down by 20.00 EUR since last week, with the front year contract trading at 115.00 EUR/MWh. API2 coal prices are down by 5.00 USD since last week, with the Cal23 contract trading at 93.00 USD/tonne. EUR/USD is up by 90 points since last week and is currently trading at 1.1420.
Price development of EUA Dec2022 futures contract