Carbon Weekly Newsletter

This newsletter was published 31.8.2022 at 16:28pm CEST

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

Aggressive drop from fresh all-time highs was one of the most volatile moves EUAs ever experienced in absolute terms. Price fell from 99.22 to 79 EUR in more or less a straight line, with only one consolidation in the middle of the move. Upcoming resumption of full auction volumes and awaited emergency actions from Brussels might have been the reasons why price dropped so severely. Recent daily auctions have attracted less and less interest, which might be not only due to high EUA prices, but especially energy commodities and power. Only 12 participants active on EEX spot auctions have placed their bids yesterday, which is the lowest participation rate since November 2016. As a result, auction cleared more than 50 cents below prevailing spot price and amplified the selling pressure afterwards. It does confirm that utilities have been much affected with surge in variation margins, and thus available cash liquidity. Even from technical point of view, EUA showed little to no sign of any support when tumbling from the highs. Price easily traded through levels with large open interest at 95, 90 and 85 EUR, before finding some real buyers at around 80 EUR. This level has been visited the most times during this year, with price oscillating around it violently but somehow always finding a way back. Along with rising interest rates, many industries in Europe might face challenging times ahead if no structural solution regarding gas and power prices are found soon enough. Encouragingly, the European Commission has already started discussions on how to tackle the crisis, which resulted with eased power and gas prices. Price of benchmark German Calendar 2023 power futures almost halved, while TTF Calendar 2023 fell by roughly a third.

German power prices are down by 70.00 EUR since last week, with the front year contract trading at 570.00 EUR/MWh. API2 coal prices are down by 3.00 USD since last week, with the Cal23 contract trading at 305.00 USD/tonne. EUR/USD is up by 90 points since last week and is currently trading 1.0000.

Price development of EUA Dec2022 futures contract

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