Carbon Weekly Newsletter

This newsletter was published 15.7.2020 at 18:12pm CEST

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

EUA prices keep surprising everyone as they reach the highest levels since 2006. The reasons behind the unusual strength of the market are still unexplained. Some are blaming algo trading strategies which amplify the buying pressure, while others suspect a single buyer propping up the prices. Whatever the reason, the trend has been clear and there are still no signs of a possible reversal for now. At the moment we see some intraday weakness but this should have little effect on the overall trend. Ever since the lows on March 18 we have not seen more than 3 consecutive down days. This confirms the immense strength of the move up and raises the question of how far can the prices continue to rise. Decreased interest from participants to trade at these high prices is evident from low liquidity in the order book and consistently low auction outcome results. That makes it easy for prices to change quickly in a very short time. While dips are possible, they will likely be limited and the most likely outcome at the moment seems to be a bounce from support at around 28.00 EUR/EUA.

German power prices are down 0.20 EUR/MWh since last week, with the front year contract trading at 42.60 EUR/MWh. API2 coal prices are up 2.10 USD/tonne since last week, with the Cal21 contract trading at 60.50 USD/tonne. EUR/USD is up 100 points since last week and is currently trading at 1.1420.

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

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