Carbon Weekly Newsletter

This newsletter was published 24.5.2023 at 15:57pm CEST

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

EUAs continue to slide lower, as weak fundamentals along with negative sentiment remain the main driving forces in the market. For a short period of time last week EUAs traded above 90 EUR per tonne, however market was thin, and disappearance of buyers caused a sharp drop on Friday afternoon. Selling pressure continued after the weekend as well and market soon reached 200-day moving average. The indicator previously acted as technical support and market had found the level important. First test and rebound was somehow aligned with overall big short positioning that had been accumulated in late April and early May. Some participants had covered their positions on first test, causing prices to go up by almost 10 percent. However, it might be different this time. COT report suggests that short position is getting smaller, while EUAs are trending lower. Such market dynamics could be more “natural”, since EUAs have not been pushed lower by force but have rather developed a new trend. This might have happened due to alignment of several factors, such as mild spring temperatures, high levels of renewable energy production, especially wind, negative sentiment in major global markets and finally very low gas prices. Front month TTF has been trading sub 30 EUR for MWh for a few days already, making fuel switching from coal to gas more economical. Until those reasons prevail, it might be difficult to expect a recovery in prices, but rather continuation of a trend.

German power prices are down by 5.50 EUR since last week, with the front year contract trading at 134.75 EUR/MWh. API2 coal prices are down by 7.55 USD since last week, with the Cal-24 contract trading at 103.50 USD/tonne. Front year gas prices are down by 0.420 EUR since last week, with the TTF Cal-24 trading at 50.250 EUR/MWh. EUR/USD is down by 40 points since last week and is currently trading 1.0780.

Price development of EUA Dec2023 futures contract

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