This newsletter was published 7.4.2021 at 6:34pm CEST

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

New record prices for EUAs. After a fairly tight range last week, prices have moved higher again. Strong trend, that has lasted for months, does not seem to be ending and everything points to further increases. Tuesday’s auction cleared at around 25 cent premium to the secondary market. When you take into account that this was the second highest historical clearing price at 43.05 EUR, it is obvious that demand is high. With only three weeks to go until the deadline for submission of allowances, late buyers are facing a tough decision. Buy now, at record high prices, or wait for a possible correction and risk ending up paying much higher prices in the end. On top of high prices, some companies that were counting on selling their free Phase 4 allocation and using the proceeds to cover their 2020 emissions, are yet to receive it. This concentrates the buying pressure to April and moves the sales months ahead, causing unfavourably balanced market. Due to extended weekend, options activity was quite low since last Wednesday. Open interest barely changed, the biggest of all was 1.75 million EUAs added at 47 strike for June expiry. Preliminary emissions data, released last week, was in line with expectations. The number came out at 12.6% drop in 2020 emissions compared to 2019. More precise data will be coming out in the next weeks but it seems that the final number will not be much different.

German power prices are up 1 EUR/MWh since last week, with the front year contract trading at 57.80 EUR/MWh. API2 coal prices are unchanged since last week, with the Cal22 contract trading at 72.00 USD/tonne. EUR/USD is up 170 points since last week and is currently trading at 1.1890.

Price development of EUA Dec2020 futures contract

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