Carbon Weekly Newsletter

This newsletter was published 22.9.2021 at 16:14pm CEST

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

Since last week, EUA trading was calm and range bound. Quarterly option expiry had to do a lot with the recent market moves. Open interest for September expiry was largest at 60 EUR strike, and as such, acted as a magnet. This price action was reminiscent of the previous option expiry, especially due to narrow trading range. After the last expiry, market expanded to the upside in the following days and created previous all-time high. Even though the current market seems to be lagging behind momentous European energy complex, there might be a possibility for another push to the upside. Auctions in the past week have been strong, offering little to no discount below secondary market. Average daily trading volumes have been healthy, as more than 26 million allowances traded yesterday in Dec-21 futures and additional 5.8 million elsewhere on ICE exchange. Fascinating price action is currently happening in UK emission allowances market, which is performing better than EUAs. Strong bullish trend in UKA might be contributed to rising UK power prices, especially sharp day ahead price spikes to the upper band, which could be consequence of fire eruption on power cable, connecting Central Europe to UK. For as long as there is shortage of energy commodities and ever-increasing power demand, EUAs might likely continue trading in established trend.

German power prices are up down by 1.50 EUR since last week, with the front year contract trading at 104.00 EUR/MWh. API2 coal prices are down by 2.75 USD since last week, with the Cal22 contract trading at 126.00 USD/tonne. EUR/USD is down by 80 points since last week and is currently trading at 1.1730.

Price development of EUA Dec2021 futures contract

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