Carbon Weekly Newsletter

This newsletter was published 15.12.2021 at 17:24pm CEST

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

Despite supporting fundamentals, EUAs remain trading around 80 EUR, approximately 10 EUR from all-time high, seen in early December. After unsuccessful attempt to push to triple digits, market fell and consolidated at lower prices. A lot of current price action could be contributed to yearly option expiry and thin market. Yearly options for EUAs were cleared at 80,68 EUR, slightly above 80 EUR strike with open interest of 15,5 million allowances. Daily trading ranges of 5 EUR have been seen almost every day in the past weeks, as market participants unwound or rolled-over their positions. Auctions have been poorly covered most of the time and, on few occasions, offered a substantial discount below secondary market. This could be due to liquidity issues or lack of buying interest at the end of year. Daily trading volumes have been above average; however, volume has been distributed through large trading range. This caused sharp and one-sided moves, often with very little trading. Emission allowances remain supported in the UK as well, since there will be no regulatory intervention after steadily rising price. Fresh supply in 2022 could, however, help reduce price of UKA in the midterm. Fundamentals, especially colder weather at the end of year and long-term technical indicators remain bullish, although some corrections in emissions could be expected.

German power prices are up by 15.75 EUR since last week, with the front year contract trading at 206.00 EUR/MWh. API2 coal prices are up by 8.05 USD since last week, with the Cal22 contract trading at 124.05 USD/tonne. EUR/USD is down by 60 points since last week and is currently trading at 1.1250.

Price development of EUA Dec2021 futures contract


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